HUDCC OverallReport HP2004 02

Management Services
Report No. 2004-02

Sectoral Performance Audit
Housing Program
of the Government
Housing and Urban Development

Coordinating Council
Overall Report
Republic of the Philippines
Commission on Audit
MANAGEMENT SERVICES
Commonwealth Avenue, Quezon City, Philippines
Telephone Nos. 931-9235, 931-7455
September 5, 2005
VICE-PRES. NOLI L. DE CASTRO

Chairman
Housing and Urban Development Coordinating Council
Atrium Building, Makati Avenue
Makati City
S i r:
We are pleased to transmit the overall report on the sectoral

performance audit of the Housing Program of the Government. The audit
covered the following agencies:
• Housing and Urban Development Coordinating Council

• National Housing Authority
• Home Development Mutual Fund
• National Home Mortgage Finance Corporation
The audit was conducted from July 7, 2004 to February 8, 2005 by a

team from this Office in compliance with MS/TS Office Order No. 2004-023
dated June 10, 2004. The results of the audit were forwarded for comments to
the respective Offices on May 26, 2005. Their comments were incorporated in
the report, where appropriate.
The team assessed the effective implementation of the housing program

using CYs 2003 to 2004 data under the following criteria:
• Sound Shelter Planning and Coordination;

• Reasonable Land Acquisition and Banking;
• Affordable Housing Units;
• Efficient Collection of Loan Amortizations;
• Well-defined Disposition/Distribution Policies; and
• Effective Enforcement of Sanctions
We look forward to the proper implementation of the recommendations

and we would appreciate being informed on the actions taken thereon within
one month from receipt hereof.
We acknowledge with gratitude the cooperation and assistance
extended to the team by the officials and staff of that Office.
Very truly yours,
By Authority of the Chairman:

Contents_____________________________________ _Page
Part I Executive Summary 1
Introduction 2
Audit Objective 3
Audit Scope & Methodology 3
Audit Conclusion 4
Management’s Reaction to Audit Observations 5
Part II The Government’s Housing Program 6
Introduction 7
Targets 8
Accomplishments 9
Strategies & Reforms 9
Housing Statistics 13
Agencies Implementing the Program 15
Housing Packages 17
Fund Source and Disbursements 17
Part III The HUDCC 18
Introduction 19
The Total Housing Needs for CYs 2001-2004 20
The Reporting System 27
Targets and Accomplishments 28
Organizational Structure 30
Manpower Complement 30
Funding Source 31
Part IV Audit Observations 32
Chapter 1 Sound Shelter Planning and Coordination 33

Funds
Introduction 34
Observations 34, 36
Management’s Comments and Team’s
Rejoinder 35, 38
Chapter 2 Affordable Housing Units 40

Funds
Introduction 41
Observation 41
Rejoinder 45
Contents Page
Chapter 3 Efficient Collection of Loan Amortization 50

Funds
Introduction 51
Observation 51
Rejoinder 58
Chapter 4 Well-defined Disposition and Distribution

Policies 63
Introduction 64
Observation 64
Rejoinder 68
Chapter 5 Reliable Performance Indicator 73
Introduction 74
Observation 74
Rejoinder 80
Chapter 6 Reasonable Land Acquisition and Banking 84
Introduction 85
Observation 85
Rejoinder 89
Part V Recommendations 93
Part I
Executive Summary
1
EXECUTIVE SUMMARY
INTRODUCTION
The government’s housing program was aimed at expanding shelter security to

every Filipino family through the grant of security of land tenure and provision
of socialized housing to landless and homeless urban poor families and low-
cost/economic housing units for low-salaried employees.
In line with this objective, the government adopted five essential strategies in
solving the problem. These consist of making the housing market more
efficient, creating a sustainable housing finance system, accelerating assistance
and provision of security of tenure for informal sector, making housing loans
available and affordable to low salaried members of the formal sector and
strengthening the shelter delivery system, and accelerating the localization of
housing and development efforts.
For CYs 2001 to 2004, the government estimated that the total housing needs
would be 3.624 million units composed of total backlog of 2.073 million and
new household requirements of 1.551 million. The great need for housing is
most felt in the country’s thickly populated regions of the National Capital
Region (1.06 million units), Southern Tagalog (0.6 million units) and Central
Luzon (0.3 million units).
Against a total housing need of 3.624 million units for the four year period, the
housing sector is targeting to accomplish 1.2 million units. This translates to an
annual target of 300,000 shelter security units in the form of a lot, a house or a
house and lot package broken down as follows:
¾ 150,000 units for security of land tenure to urban poor families;

¾ 70,000 units of socialized housing; and
¾ 80,000 housing units for poor and low-salaried workers.
While the implementation of the government’s housing program is continuous,

it seems that such efforts were not sufficient to ensure accessibility of the
socialized housing programs to the poor and low-income families, especially
those located in the urban areas. This condition was acknowledged by our
planners as manifested in the Medium -Term Development Plan for CY 2001-
2004. It was disclosed therein that the bottom 40 per cent of both urban and
rural households were forced to resort to informal housing or settlements in
congested areas under poor living conditions due to poverty.
2
EXECUTIVE SUMMARY
AUDIT OBJECTIVE
The audit was conducted to assess the effective implementation of the housing
program in addressing the needs of the homeless taking into consideration the
following:
¾ Planning and Coordination

¾ Collection of Loan Amortization;
¾ Disposition of Housing Units; and
¾ Enforcement of Sanctions.
AUDIT SCOPE AND METHODOLOGY
The audit covered the review of the implementation of the housing program by
the following agencies using CYs 2003 to 2004 data:
¾ National Housing Authority (NHA)

¾ Home Development Mutual Fund (HDMF)
¾ National Home Mortgage Finance Corporation (NHMFC)
¾ Housing and Urban Development Coordinating Council (HUDCC)
The performance of selected key shelter agencies were assessed using the
following audit criteria:
¾ Sound Shelter Planning and Coordination;

¾ Reasonable Land Acquisition and Banking;
¾ Affordable Housing Units;
¾ Efficient Collection of Loan Amortizations; and
¾ Well-defined Disposition/Distribution Policies.
To meet the audit objective, the team performed the following procedures,
among others:
¾ Reviewed existing policies and guidelines on the determination of the

total housing needs, land acquisition and banking, designing of loan
packages, and collection of data;
¾ Reviewed existing reporting system to determine completeness, accuracy
and validity of reported data;
¾ Interviewed personnel involved in the implementation of the program and
selected housing beneficiaries;
¾ Reviewed accomplishment reports and other relevant reports pertaining to
the implementation of the program; and
¾ Inspected selected housing projects.
3
EXECUTIVE SUMMARY
The audit was conducted from July 7, 2004 to February 8, 2005 in compliance
with COA MS/TS Office Order No. 2004-023 dated June 10, 2004.
AUDIT CONCLUSION
The government’s housing program could not be considered effectively

implemented due to its inability to meet the targeted 1.2 housing needs, weak
coordination among housing agencies and inadequate policies for land banking
and for disposition/distribution of available units.
Of the total estimated housing needs of 3.6 million units, 1.2 million were
targeted to be accomplished during CYs 2001-2004. Out of the total target,
only 892,216 units were reportedly accomplished as of September 2004 due to
weak coordination among the housing agencies. This reported accomplishment
may even be considered bloated as HUDCC failed to establish performance
indicators to accurately measure overall performance as evidenced by double or
triple reporting of a single accomplishment.
Not all completed units were distributed/awarded or disposed of. An

accumulated total of 66,694 units remained undisposed or undistributed by the
implementing agencies as of September 2004 due to inadequate policies for
disposition of available units while another 19,179 acquired units remained on
hand defeating the purpose for which these units were generated. Of the 19,179
acquired units for disposition, documentary requirements of 8,571 units are still
being completed while disposition papers of 855 units are already in process.
These conditions not only wasted government’s limited resources but likewise
deprived qualified beneficiaries of decent housing.
Inadequate planning were evident on the following cases:
• In five NHA projects, only 2% to 60% of the total number of affected

families were included in the NHA’s target. Moreover, it appears that
the affordability level of the projects vis-à-vis the paying capacity of
the targeted beneficiaries was not considered in prescribing the floor
prices for socialized housing units contributing to the accumulation of
unawarded units and low collection efficiency. The prescribed floor
prices of P629.40 to P2,130 were not affordable to the lowest 30% of
the urban wage earners the NHA intends to serve.
• Of the total 10,882 hectares of land acquired by the NHA as of June

2004, 614 remained idle, undeveloped and without any intended
beneficiaries of which 287 were acquired during the period 1995 to
4
EXECUTIVE SUMMARY
2003. Included in this inventory are 48 hectares of land with existing

tenancy problems.
In addition, the implementing agencies’ ability to sustain continuous

implementation of housing projects was affected by their failure to collect
amortization payments on time.
These conditions adversely affected the ability of the government to address the
housing problems.
As the housing program is one of the priority programs of the government, the
team recommended measures under Part IV of the report to improve the
performance of the housing sector.
MANAGEMENT’S REACTION TO AUDIT OBSERVATIONS
The results of the audit were forwarded to the respective heads of HUDCC,
HDMF, NHA and NHMFC on May 26, 2005 for comments. In general,
HUDCC supports some findings and recommendations of the team and
submitted comments on some other concerns which are common to all shelter
agencies. Their comments were incorporated in the report together with the
team’s rejoinder.
5
Part II
The Government’s Housing Program
6
THE GOVERNMENT’S HOUSING PROGRAM
INTRODUCTION
The housing situation in the country is characterized by substantial housing

shortage which is estimated at 3.624 million units for the period 2001-2004
composed of:
homeless families housing for

house for 0.23%(8,239) upgrading
replacements 6%(215,799)
35% (1.255M)
double families projected new

residing in one place households' need
16%(593,356) 43%(1.551M)
Housing Need
(source: National Statistics Office)
The accumulation of demand for housing may be attributed to the following

factors:
• High population growth rate;

• Low affordability of targeted beneficiaries;
• Spiraling cost of construction materials and land;
• Low level of housing production; and
• Limited financing.
Records show that over the period 1987 to 2004, out of the total housing needs
of between 2.70 to 3.72 million, the shelter units supplied ranges only from
0.268 to 0.892 million as tabulated below.
Term of Estimated Shelter Security

Administration Housing Need Units Supplied
1987-1992 2.70 M 268,249

1992-1998 3.72 M 594,370
1999-Oct.2000 3.36 M 274,727
2001-2004 3.62 M 892,216 *
* As of September 2004
Source: Sectoral Budget Analyses
7
TARGETS
Against a total housing need of 3.624 million, the housing sector targeted to
provide 1.2 million units or a third of the total need for the period 2001 – 2004.
This target, which translates to 300,000 shelter security units annually and a
funding requirement of P215.16 billion, is broken down into:
• 150,000 units for security of land tenure to urban poor families;

• 70,000 units of socialized housing for the poor; and
• 80,000 low-cost housing units for low-salaried employees.
This target was intended to be achieved by a collective efforts of the following

government and non–government entities:
Target Agency/Entity
A. 150,000 land tenure for HUDCC

the poor NHA
NHMFC
B. 70,000 socialized housing NHA
HDMF
Private Organizations such as Gawad
Kalinga
C. 80,000 low-cost housing HDMF
Gov’t. Financing Institutions (GFIs)
Land Bank of the Philippines (LBP)
Social Secutiry System (SSS)
Gov’t. Services Insurance System (GSIS)
Dev’t. Bank of the Philippines (DBP)
The Subdivision and Housing Developers
Association, Inc. (SHDA) and the
Chamber of Real Estate Builders
Association, Inc. (CREBA)
Security of tenure refers to the degree of protection afforded to qualified

Program beneficiaries against infringement or unjust, unreasonable and
arbitrary eviction or disposition, by virtue of the right of ownership, lease
agreement, usufruct and other contractual arrangements.
Socialized housing refers to housing programs and projects covering house and
lot or homelots only undertaken by the government or the private sector for the
underprivileged and homeless citizens.
8
ACCOMPLISHMENTS
For CYs 2001-2004*, the HUDCC reported that 74.35% of the targets were
actually accomplished through the consolidated efforts of the following housing
agencies and private developers:
Accomplishments
Target Variance
(2001-2004)*
Agency (2001-2004)*
No. % Quantity %
HUDCC/
600,000 land tenure for
other agencies 236,955 39.49
the urban poor
NHMFC 66,000 11.00
(150,000/year)
NHA 14,083 2.35
Sub-total 317,038 52.84 282,962 47.16
NHA 91,399 32.64
HDMF 280,000 socialized 36,959 13.20
HUDCC housing 69,104 24.68
NGOs 1,150 0.41
Sub-total 198,612 70.93 81,388 29.07
HDMF 189,646 59.26
SSS 7,965 2.49
DBP 44,460 13.89
LBP 19,873 6.21
320,000 low-cost housing
GSIS 12,638 3.95
NHA 5,167 1.61
SHDA 70,643 22.08
CREBA 26,174 8.18 ( 56,566) (17.67)
Sub-total 376,566 117.67
Total 1,200,000 892,216 74.35 307,784 25.65
* As of Sept. 2004
STRATEGIES AND REFORMS
As discussed in the Medium Term Development Plan, the government intends

to employ a number of strategies to address the housing problem. The
strategies and the reforms or initiatives that were instituted/being instituted by
key shelter agencies to facilitate the implementation of the housing program of
9
the government follow:
Imp. Guidelines
Strategies Reforms
Agency Issued
Making the housing market more efficient

Pursue policy, legal and HLURB Amended the Implementing Rules and Regulations (IRR) of Resolution
regulatory reforms to P.D. 957 (Subdivision and Condominium Buyers’ Protective No. 725
reduce transaction costs Decree) and Batas Pambansa No. 220 (Economic and dated 6/19/02
and improve the efficiency Socialized Housing Projects) by deleting the price ceiling
of the housing market; provision; increasing the density or number of lots and/or
dwelling units per hectare in the subdivision to be allocated
areas for parks and playground and community facilities;
increasing to three years the validity of development permit,
reducing the minimum requirement for right-of-way of alley to
2 meters and deleting the requirement for the submission of
DAR Exemption Clearance.
Amended the guidelines on the acceptance, processing, Memo. Circular
approval and issuance of the following applications by: No. 9 dated
• For application for Development Permits of Condominium 2/7/02
Projects:
Dispensing with the Locational Clearance from the
LGU if the project is located within a High Density
Residential or Commercial Zone; and
Receiving, processing and evaluating applications
and issuing a conditional Development Permit
pending receipt of the Environmental Compliance
Clearance from the DENR or Order of Conversion
from DAR
• For applications for Certificates of Registration and
License to Sell for subdivision and Condominium Projects:
Receiving, processing and evaluating applications
upon submission of proof of filing of application for
the necessary certifications, permits or approvals
from appropriate agencies and public utilities
concerned pending the receipt of the same.
Produce decent housing HUDCC Accredited 32 innovative housing technologies and materials Amended
units and lower cost, since 2002 and all of which are being used as of December Implementing
pursue the development of 2004. Guidelines on
appropriate housing and the
subdivision standards that Accreditation
are easier to enforce and of Innovative
promote the development Technologies
of new housing for Housing
technologies taking into issued in CY
consideration the safety 2003
and welfare of households.
Streamline the number of HLURB Streamlined processes in securing housing-related E.O. 45 dated
days and processes for loan certifications, clearances and permits by prescribing time 10/24/01 and
applications and housing periods, which reduced the number of signatories from more DILG Memo
permits. than 200 to 45, and imposing sanctions for failure to observe Circular No. 13
the same, effective Oct. 24, 2001. dated 1/31/02
NHMFC Reduced the number of documentary requirements under the Corp. Circular
CMP from 56 to 18 documents to ensure expeditious Nos. CMP-027
processing effective Oct. 25, 2001. dated 10/25/01
and CMP-028
dated 2/5/02
10
Imp. Guidelines
Strategies Reforms
Agency Issued
HDMF Reduced processing time to as short as 7 working days Circular No.

effective Aug. 23, 2004 18-B dated
8/23/04
Creating sustainable housing finance system
Improve the environment HDMF Increased loan to collateral ratio from P180,000 to P500,000 Circular No.
for the primary and effective Oct. 16, 2002 for accounts under the buy-back 189-B dated
secondary mortgage agreement with developers. This practically eliminates equity 10/30/02
market. for loan up to P500,000.
Refinancing an existing mortgage loan with an institution Circular No.
acceptable to Pag-IBIG effective Oct. 16, 2002. 189-B dated
10/30/02
Provided direct developmental loan to private subdivision and Circular Nos.
housing developers effective May 27, 2004 to increase 184-D, & E,
inventory of housing packages through the Pag-IBIG City 188-D dated
Program and Pag-IBIG Towers or Medium High Rise Building. 5/27/04
Provided financial assistance to organized groups of formally Circular No.

employed Pag-IBIG members effective Oct. 18, 2002 to 80-J dated
acquire and develop land where they intend to construct their 10/18/02
homes.
Provided liquidity mechanism for private developers (credit Circular No.
facility) effective May 27, 2004 to enable them to continue 154-F dated
developing housing projects pending the take-out of delivered 5/27/04
and complete housing loan application.
Pursue financial and credit HDMF Purchased in-house portfolio of developers effective Aug. 14, Circular No.
policy reforms including 2002 to ensure availability of capital for further development of 196 dated
review of the Multi- more housing projects. 8/14/02
Window Lending System
and interest rate structure
per EO 138 and develop
innovative financial
schemes to include a
securitization program,
development of a private
secondary mortgage
institution and reforms in
pension funds and
contractual savings.
Accelerating assistance and provision of security of tenure for the informal sector
Give priority to settlers in NHMFC Revised CMP Guidelines increasing loan ceilings; providing Corp. Circular
danger areas, those financing for related expenses in the transfer of title from CMP No. 026
affected by government landowner to community association; liberalizing land dated 8/31/01
projects, and in threat of conversion requirement; and accepting collateral property for
demolition and pursue the on-site projects
regularization of informal Changed and modified CMP Policy increasing loan ceiling, Corp. Circular
settlers occupying public modifying off-site projects; and defining occupancy status CMP No. 030
lands through community- issued of on-te projects. dated 9/10/03
led-self-help approaches HLURB Exempted on-site housing projects of non-governmental and Resolution No.
under various government Non-Profit Organizations and Foundations Engaged in 768 dated
programs; and Community Development for the Homeless Sector from the 6/16/04
Licensing Requirements of the HLURB
NHA Revised guidelines for the utilization of the Local Housing Memo. Circular
Fund for CBTAP Assistance Proposals No. 1718
dated 8/31/01
11
Imp. Guidelines
Strategies Reforms
Agency Issued
NHA Issued policy guidelines on the grant of resettlement assistance Memo. Circular
No. 1781 dated
2/3/03
HUDCC Curtailed the proliferation of professional and squatting E.O. No. 153
syndicates effective Dec. 10, 2002. dated 12/10/02
Enhance targeting of HDMF Leased to qualified Pag-IBIG members housing units acquired Circular No.
beneficiaries for more by Pag-IBIG with Option to Purchase by the time they become 177-B dated
equitable distribution of eligible for housing loan through its Rent-To-Own Program. March 25, 2004
housing assistance and
provide rental housing
options for the poor.
Making housing loan available and affordable to low-salaried member of the formal sector
Pursue the development of HDMF Reduced interest rates for the retail-lending program, effective Circular Nos.
sectoral and institutional Oct. 16, 2002 resulting in lower monthly amortization. New 189-B dated
housing projects, such as interest rate structure follow: 10/30/02 and
PNP and AFP Housing 189-C dated
Program, Teachers’ Loan Amount Interest Rate 7/20/04
Housing Program, OFW
and Workers’ Housing P 150,000 and below 6% (from 9%)
Program, Cooperatives’ Over P 150,000 –
Housing Program, LGU P 225,000 9%
Housing Program, Over P 225,000 – 10% (from
Corporate Housing P 500,000 12%)
Program and National Over P 500,000 –
Government Housing P 2,000,000 12%
Program; and
Eliminated the twenty four (24) month residency requirements Circular No.
under the Pag-IBIG program by allowing lump sum payment 189-B dated
equivalent to twenty four (24) monthly contributions. 10/ 30/02
Extended loan term from twenty five (25) years to thirty (30) Circular Nos.
years effective Nov. 9, 2001 to further lower the required 189, 189-A,B
monthly amortization. and C.
Reduced the loan administration fee from five percent (5%) of Circular No.
loan value to a fixed fee of only three thousand pesos (P 182-B dated
3,000.00) effective Aug. 23, 2004. 8/23/04
Reduced monthly contributions of Pag-IBIG Overseas Program Circular
(POP) members from $20 to $5 US dollars effective Feb. 28, Nos..98-C
2004 and extending loan term from five (5) to twenty (20) years dated 2/28/04
effective July 20, 2004. and 189-C
dated 7/20/04
NHA Issued guidelines for disposition of completed projects under Memo. Circ.
the Medium-Rise Housing Program. No. 1809
dated 5/9/03
Institutionalizing salary HDMF Requiring loan payment, whenever feasible, through salary HDMF Circular
deduction scheme for deduction. Nos. 189-A, B
government and private & C.
sector employees where
borrowers will be entitled
to a reduced interest rates.
Strengthening the Shelter Delivery System and accelerating the localization of housing and development efforts
Pursue the creation of the HUDCC Worked with Congress in coming up with a Draft Bill for the
Department of Housing creation of the DHUD.
and Urban Development
(DHUD); and
12
Imp. Guidelines
Strategies Reforms
Agency Issued
Provide capacity building HLURB 1. Assisted 173 LGUs in CY 2003 in formulating, revising or
and technical assistance to updating their CLUP and Zoning Ordinance (ZO); and
LGUs especially in 2. Monitored the status of approval of completed plan of 606
preparing and updating LGUs.
their Comprehensive Land
Use Plans
HOUSING STATISTICS
The National Statistics Office (NSO), as a result of a census on population and

housing conducted in 2000, reported the following statistics:
¾ Average household size down to five persons
• While the highest registered household population is 6.13 persons

nationwide, the average household size is 5 persons as tabulated below:
No. of Household Average

Regions Households Population Household Size
NCR 2,132,989 9,880,102 4.63

CAR 263,851 1,360,611 5.16
Region 1 831,549 4,196,276 5.05
Region 2 554,491 2,809,520 5.07
Region 3 1,632,047 8,021,325 4.91
Region 4 2,413,043 11,764,246 4.88
Region 5 893,833 4,684,111 5.24
Region 6 1,211,804 6,202,431 5.12
Region 7 1,133,767 5,689,814 5.02
Region 8 715,070 3,603,708 5.04
Region 9 595,831 3,085,322 5.18
Region 10 542,071 2,743,894 5.06
Region 11 1,066,199 5,181,299 4.86
Region 12 501,870 2,591,472 5.16
ARMM 393,269 2,410,845 6.13
CARAGA 393,362 2,091,505 5.32
Total 15,278,808 76,332,470 5.00
¾ Five out of ten households owned/amortized their housing units
• The NSO Survey also showed that about 53% of household population
owned or amortized the units being occupied. The rest are under various
categories as illustrated on the next page.
13
Not Reported
Occupied for Free Without 3%
Not categorized
Consent of the Owner
Occupied for Free with
3%
Consent of the Owner 3%
27%
Rented Owned/Being amortized

11% Household's Profile by occupants 63%
¾ Nine out of ten were single houses
• Out of total occupied housing units of about 15 million, 13 million were

single houses while the rest are combination of various types of structures:
Occupied Household
Type of Bldg. & Region Housing Units Households Population
Total 14,891,127 15,278,808 76,332,470

Single House 13,064,683 13,354,587 67,454,476
Duplex 527,699 555,462 2,589,274
Multi-Unit Residential 1,029,801 1,093,780 4,800,803
Comm’l/Ind’l./ Agricultural 41,336 43,306 189,099
Institutional Living Qtrs. 5,363 5,619 25,075
Other Housing Unit 9,899 10,440 44.577
Not Reported 212,346 215,614 1,227,445
¾ Majority of the housing units only need minor repair or no repair at all
• Overall, survey revealed that about 68% of the total households are still in
good condition with minor repairs needed as presented below:
Not classif ied

3.07%
Unfinished Needs M inor
Construct ion Repair
5.31% 68.57%
Under
Construct ion
1.82%
Dilapidat ed/ Needs M ajor

Under
Condemned Repair 19.09%
Renovation
0.77%
1.37%
¾ One in three houses was built between 1996 to 2000
• The survey also showed that most households are relatively new. Of the 15
million occupied housing units, 30.27% were built between 1996 to 2000,
22.38% between 1991 to 1995, and 21.20% between 1981 to 1990.
14
¾ Housing units had a floor area ranging from less than 20 to over 120
square meters or a median of 24 sq. m. as presented in the graph
below:
Occupied Housing Units by Floor Area
25
P 20
23.45
E
15 18.78
R
C 17.52
16.56
E 10
N 8.15
T 5
4.45 5.13
3.21
0
<10 10-19 20-29 30-49 50-69 70-89 90-119 120+
Floor Are (in square meter)
¾ About 24% of the renter-households are paying a monthly rental of

P1,000 to P1,999 for their housing units
• Of the 1.5 million renter-households, 23.94% are paying an annual rental

ranging from P1,000 to P1,999; 18.85% from P500 to P999; and 16.83%
from P2,000 to P4,999. Median monthly rental of housing units was
recorded at P1,157.87 per month.
¾ Housing units were constructed by owner/occupants
• Of the 10.9 million owner-households in occupied housing units, 47.24 %

constructed their own housing units with/without the help of
friends/relatives, 24.10% had them constructed by hired/skilled workers,
and 13.83 % purchased their housing units.
AGENCIES IMPLEMENTING THE PROGRAM
The government’s housing program is being implemented by a number of

government agencies in coordination with private developers with HUDCC as
the lead agency. The participation of each agency is graphically presented on
the next page.
15
HUDCC
(Planning, Coordination & Monitoring)
Permits/ Funding / Financing Production / Construction Guaranty

Licenses
H N S G P H N L P G P H
L H S S B D H G S K D G
U M S I M A U / C
R F S F H
B C H
Program Program Program Programs
A D C P C M D G R R L
m e M E
S L S M
C F H D L e s S T U R a
o v P R L A t n
r A H
B P D a P d
t L i
o l T
S a e
u n n
p u
p r
e
Formal
Beneficiaries
Informal
Legend: Legend:
HLURB – Housing and Land Urban Regulatory Board CMP – Community Mortgage Program
NHMFC – National Home Mortgage Finance Corporation PC – Pag-Ibig City
SSS – Social Security System CF – Credit Facility
GSIS – Government Service Insurance System MHRB – Medium-High Rise Condominium Building
PB – Private Banks DDLP – Direct Developmental Loan Program
HDMF – Home Development Mutual Fund GLAD – Group Land Acquisition and Development
NHA – National Housing Authority RES – Resettlement
LGU – Local Government Unit SS – Sites and Services
PS – Private Sector LTAP – Land Tenurial Assistance Program
GK/HH – Gawad Kalinga/Habitat for Humanity SU – Slum Upgrading
PD – Private Developer MRH – Medium Rise Housing
HGC – Home Guaranty Corporation
16
HOUSING PACKAGES
Under HUDCC Memorandum Circular No. 02 dated October 21, 2002, there
are three housing packages with the following loan ceilings:
Housing Package Loan Ceiling
Socialized P 225,000 and below

Low-cost
Level 1 P 225,000 to P 500,000
Level 2 P 500,000 to P 2 million
FUND SOURCE AND DISBURSEMENTS
Under the government’s shelter finance delivery system, funds for housing
projects are provided by the National Government (NG) and the five
government financial institutions (GFIs), namely: the HDMF, GSIS, SSS, LBP
and DBP. For CY 2003, the national government allocated P6.2B of which
only P3.089B was disbursed while GFIs allocated P41.628B of which P23.83
was disbursed.
National Government and GFIs Allocations
25
20
(in Millions)
15
10
0
NHA NHMFC HDMF GSIS SSS LBP DBP
Allocation Disburseent
17
Part III
The HUDCC
18
THE HUDCC
INTRODUCTION
HUDCC was created under Executive Order (E.O.) No. 90 issued on December
17, 1986 as an agency under the immediate control and supervision of the
Office of the President. It was mandated to coordinate the activities of all key
government housing agencies responsible in implementing the National Shelter
Program (NSP) of the government.
Under subsequent issuances, the HUDCC was mandated to perform the

following responsibilities:
Authority Responsibilities
• Serves as the sole lead agency to assist the

President in the formulation and implementation
of the national objectives, policies, and strategies
for housing and urban development;
• Coordinates and monitors the activities of all
government agencies undertaking housing
projects, including those of LGUs, to ensure the
accomplishment of the goals of the government’s
housing program;
• Encourages the maximum participation of the
E.O. 216 & 20 private sector in all aspects of housing and urban
dated development;
2/22/00 & 5/28/01 • Formulates the basic policies, guidelines and
implementing mechanisms for the disposal or
development of acquired or existing assets of the
key housing agencies that are not required for the
accomplishment of their basic mandates;
• Identifies, plans and secures local and foreign
funding for housing programs and projects;
• Provides directions to the HLURB to ensure
rational land use for the equitable distribution and
enjoyment of development benefits;
• Recommends new legislation and amendments to
existing laws as may be necessary for the
attainment of government’s objectives in housing.
19
THE HUDCC
Authority Responsibilities
• In-charge of supervision, management and

monitoring of fourteen (14) resettlement sites known
as the Mt. Pinatubo Lowland Communities. It
undertakes the following resettlement functions:
Executive Order a) awards Certificates of Housing
Nos. 6 and 54 Allocation (COHA) to qualified Pinatubo
dated 3/20/01 resettlement beneficiaries;
& 11/7/01 b) constructs new housing units;
c) relocates families to housing units;
d) constructs commercial stalls and awards
stall rights.
• Administers the following properties turned-over by

BCDA:
BCDA Area No. of

Property (Hectares) Beneficiaries
Executive Order
No.70 Bhit Zone 35.0 3,000
dated 2/11/02 Lupang 48.0 3,000
Katuparan
Diego Silang 23.86 2,880
Phil. Centennial
Village 13.08 1,140
Total 119,94 10,020
Executive Order • Mandated to fast track the development of housing

No. 102 projects in areas proclaimed as housing sites.
dated 5/17/03
All government departments, agencies, bureaus and instrumentalities, including

government-owned and controlled corporations implementing housing projects
are directed to seek the clearance and approval of the HUDCC Chairman on
their respective housing and other related projects.
THE TOTAL HOUSING NEEDS FOR CYs 2001 - 2004
HUDCC is responsible in projecting the total housing needs since 1987. It was
then using the United Nations (UN) Component Method prescribed in the
UNFPA-NCSO Population Research Project entitled “Projections of Housing
20
THE HUDCC
Needs by Region and Province: 1970-2000” as the basis for assessing the
housing needs for calendar years 1987 – 1992. In 1993, HUDCC shifted to the
UN Shelter Method in calculating the housing needs.
The UN Shelter Method is a result of a HUDCC-United Nations Centre for

Human Settlements (UNCHS) project entitled “Formulation of Regional
Shelter Strategies Towards the Development of the Philippine National Shelter
Strategy”. Under this project the “Guidelines for the Preparation of Local
Shelter Plans” was formulated and established.
Using the 1990 Census of Population and Housing (CPH) of the National
Statistics Office (NSO) and CY 2000 projection of the total households,
HUDCC computed the total housing needs for the period 2001 – 2004 applying
the UN Shelter Method as follows:
HOUSING NEED = BACKLOG + NEW HOUSEHOLDS
Where:
• Backlog = Doubled-up + Displaced + Homeless + Upgrading
¾ Doubled-up = Total Households – Occupied Housing Units
Total Households = Urban Households + Rural Households
CY 2000 Urban Households = CY 1990 Urban Householdsx CY 2000

Households CY 1990 Total Households
CY 2000 Rural Households = CY 1990 Rural Households x CY 2000

Households CY 1990 Total Households
Occupied Housing Units = CY 2000 Urban Households x 1– (CY 1990 Ratio

of Urban Households to Urban Occupied Housing
Units ) + CY 2000 Rural Households x 1–
(CY 1990 Ratio of Rural Households to Rural
Occupied Housing Units )
¾ Displaced = No. of informal settlers per NHA Survey
¾ Homeless = 2000 Urban Households x 0.1% + 2000 Rural Households x

0.01%
¾ Upgrading = Makeshift units – Squatters in Makeshift Units
21
THE HUDCC
• New Households = Total Households, given year –

Total Households, preceding year
= CY 2001 Total Pop’n. + (CY 2000 Growth
rate x CY 2000 Total Pop’n.) ÷ CY 2000
Household Size – CY 2000 Total
Households
Under this formula, it was estimated that the total housing needs for CYs 2001
– 2004 would be 3,623,630 composed of the housing backlog of 2,072,830 and
new households of 1,550,800.
Housing backlog is the number of dwelling units needed at the beginning of the
planning period, 2001–2004, due to doubled-up households, displaced units,
upgrading needs and homeless households. The housing backlog of 2,072,830
for CYs 2001 – 2004 was derived by summing up the following:
Annual
Region Doubled- Displaced Upgrading Homeless Total Ave.
up Units (4-year)
NCR 200,501 716,165 71,761 2,133 986,523 247,640

CAR 8,308 22,418 482 103 31,311 7,828
I 28,772 6,495 6,056 363 41,686 10,422
II 15,450 2,773 508 171 18,902 4,725
III 47,596 54,360 17,930 1,057 120,943 30,236
IV 59,892 179,109 28,822 1,361 269,184 67,296
V 10,707 19,076 9,968 340 40,091 10,023
VI 28,853 38,195 11,154 509 78,711 19,678
VII 16,908 47,311 18,882 518 83,619 20,905
VIII 18,270 12,611 7,227 268 38,376 9,594
IX 20,371 24,477 10,851 223 55,922 13,981
X 12,456 40,817 7,991 266 61,530 15,383
XI 23,477 39,126 11,799 562 74,964 18,741
XII 39,651 16,305 3,487 163 59,606 14,902
ARMM 31,068 3,619 4,440 128 39,255 9,814
CARAGA 31,076 32,525 4,441 128 68,170 17,042
TOTAL 593,356 1,255,382 215,799 8,293 2,072,830 518,208
Each component is described below:
Doubled-up – This condition exists when one dwelling unit

household/double is shared by two or more households. A
occupancy household is defined by NSO as a social unit
consisting of a person or a group of persons
who sleep in the same dwelling unit and have
a common arrangement for the preparation
and consumption of food.
22
THE HUDCC
For CY 2000, the doubled-up households was 593,356 as presented below:
1990 Households 1990 Ratio 2000 Households

Region
Urban Rural Total Urban Rural Urban Rural Total
NCR 1,569,588 0 1,569,588 1.0000 0.0000 2,132,989 0 2,132,989

CAR 71,046 148,303 219,349 0.3239 0.6761 85,449 178,367 263,816
I 246,574 412,829 659,403 0.3739 0.6261 310,945 520,604 831,549
II 103,664 343,175 446,839 0.2320 0.7680 128,526 425,478 554,004
III 707,428 455,777 1,163,205 0.6082 0.3918 992,564 639,483 1,632,047
IV 817,581 766,101 1,583,682 0.5163 0.4837 1,244,672 1,166,300 2,410,972
V 221,930 486,872 708,802 0.3131 0.6869 279,147 612,394 891,541
VI 350,671 634,603 985,274 0.3559 0.6441 431,240 780,407 1,211,647
VII 348,565 525,278 873,843 0.3989 0.6011 450,470 678,847 1,129,317
VIII 179,032 405,932 584,964 0.3061 0.6939 218,838 496,187 715,025
IX 176,584 401,253 577,837 0.3056 0.6944 182,051 413,677 595,728
X 277,290 361,818 639,108 0.4339 0.5661 235,190 306,885 542,075
XI 390,834 432,482 823,316 0.4747 0.5253 506,132 560,067 1,066,199
XII 142,598 429,454 572,052 0.2493 0.7507 125,115 376,800 501,915
ARMM 98,042 295,227 393,269
CARAGA 98,065 295,297 393,362
TOTAL 5,603,385 5,803,877 11,407,262 7,519,436 7,746,019 15,265,455
1990 2000
Ratio of Households
to Occupied Unit Occupied
Housing Units Sharers Housing Unit Doubled-
Region Urban Rural Urban Rural Urban Rural Total up
NCR 1.094 0.000 0.094 0.000 1,932,488 0 1,932,488 200,501

CAR 1.068 1.014 0.068 0.014 79,638 175,870 255,508 8,308
I 1.049 1.026 0.049 0.026 295,709 507,068 802,777 28,772
II 1.054 1.020 0.054 0.020 121,585 416,969 538,554 15,450
III 1.037 1.017 0.037 0.017 955,839 628,612 1,584,451 47,596
IV 1.035 1.014 0.035 0.014 1,201,109 1,149,972 2,351,080 59,892
V 1.023 1.007 0.023 0.007 272,726 608,108 880,834 10,707
VI 1.047 1.011 0.047 0.011 410,972 771,823 1,182,794 28,853
VII 1.030 1.005 0.030 0.005 436,956 675,452 1,112,409 16,908
VIII 1.020 1.028 0.020 0.028 214,461 482,294 696,755 18,270
IX 1.046 1.029 0.046 0.029 173,677 401,680 575,357 20,371
X 1.036 1.013 0.036 0.013 226,723 302,895 529,619 12,456
XI 1.032 1.013 0.032 0.013 489,936 552,786 1,042,722 23,477
XII 1.079 1.079 0.079 0.079 115,231 347,033 462,264 39,651
ARMM 1.079 1.079 0.079 0.079 90,297 271,904 362,201 31,068
CARAGA 1.079 1.079 0.079 0.079 90,318 271,968 362,286 31,076
TOTAL 7,107,666 7,564,433 14,672,099 593,356
Displaced units – This represents new dwelling units needed

to replace those occupied by households
located in danger areas or those living on
land which is needed by the government for
a major infrastructure project or in areas
where there is a court order for eviction and
demolition.
23
THE HUDCC
The total displaced units based on NHA’s survey of informal settlers as of

April 2000 for NCR and October 1999 for other regions, is 1,255,382
summarized below:
No. of displaced units
Region No. of Informal Settlers
NCR 716,165
CAR 22,418
I 6,495
II 2,773
III 54,360
IV 179,109
V 10,076
VI 38,195
VII 47,311
VIII 12,611
IX 24,477
X 40,817
XI 39,126
XII 16,305
ARMM 3,619
CARAGA 32,525
Total 1,255,382
Homeless – This represents households living in

parks, along sidewalks, and all those
without any form of shelter which should
be provided with housing units.
HUDCC estimated the number of homeless as follows:
• 0.1 % of urban households

• 0.01 % of rural households
For CY 2000, the homeless households was computed to be 8,293:
Households Homeless
Region Urban Rural Total Urban Rural Total
NCR 2,132,989 0 2,132,989 2,133 0 2,133

CAR 85,449 178,367 263,816 85 18 103
I 310,945 520,604 831,549 311 52 363
II 128,526 425,478 554,004 129 43 171
III 992,564 639,483 1,632,047 993 64 1,057
IV 1,244,672 1,166,300 2,410,972 1,245 117 1,361
24
THE HUDCC
Households Homeless
Region Urban Rural Total Urban Rural Total
V 279,147 612,394 891,541 279 61 340

VI 431,240 780,407 1,211,647 431 78 509
VII 450,470 678,847 1,129,317 450 68 518
VIII 218,838 496,187 715,025 219 50 268
IX 182,051 413,677 595,728 182 41 223
X 235,190 306,885 542,075 235 31 266
XI 506,132 560,067 1,066,199 506 56 562
XII 125,115 376,800 501,915 125 38 163
ARMM 98,042 295,227 393,269 98 30 128
CARAGA 98,065 295,297 393,362 98 30 128
TOTAL 7,519,436 7,746,019 15,265,455 7,519 775 8,293
Upgrading needs – This could take any of the following

forms:
• Tenure need – need of those

households considered to have
inadequate security of tenure on the
land they occupy, i.e., no legal title or
any other written contract on land;
• Infrastructure improvement need – if
the dwelling units lack access to one or
more basic services and utilities, i.e.,
water supply, electricity, sanitation,
road access, drainage and garbage
disposal.
• Structural improvement need – exists
if the structure of the dwelling unit is
made of temporary materials, e.g.
barong-barong units
For CY 2000, the total upgrading needs was estimated to be 215,799:
2000 Total Squatters Upgrading

Occupied in (Makeshift
Housing Makeshift Makeshift Less
Region Units Makeshift Units Units Squatters)
NCR 1,932,488 4.30 * * 71,761*

CAR 255,508 0.20 511 29 482
I 802,777 0.80 6,422 366 6,056
II 538,554 0.10 539 31 508
III 1,584,451 1.20 19,013 1,084 17,930
IV 2,351,080 1.30 30,564 1,742 28,822
V 880,834 1.20 10,570 602 9,968
VI 1,182,794 1.00 11,828 574 11,154
VII 1,112,409 1.80 20,023 1,141 18,882
VIII 696,755 1.10 7,664 437 7,227
IX 575,357 2.00 11,507 656 10,851
X 529,619 1.60 8,474 483 7,991
XI 1,042,722 1.20 12,513 713 11,799
25
THE HUDCC
2000 Total Squatters Upgrading

Occupied in (Makeshift
Housing Makeshift Makeshift Less
Region Units Makeshift Units Units Squatters)
XII 462,264 0.80 3,698 211 3,487

ARMM 362,201 1.30 4,709 268 4,440
CARAGA 362,286 1.30 4,710 268 4,441
TOTAL 14,672,099 215,799
* No details provided
Another factor contributing to the housing needs is the demand of new

households formed due to population growth. For CYs 2001 – 2004, the new
units needed were computed to be 1,550,800.
New Household Needs

Year Number
2001 406,777
2002 371,168
2003 381,239
2004 391,616
Total 1,550,800
This need is likewise distributed nationwide as tabulated below:
New Households
HH
Region Size 2001 2002 2003 2004
NCR 4.62 39,705 23,030 23,275 23,521

CAR 5.15 10,054 4,985 5,075 5,167
I 5.05 18,112 18,268 18,660 19,062
II 5.07 13,344 12,765 13,053 13,346
III 4.91 55,924 54,015 55,743 57,527
IV 4.88 95,663 93,247 96,715 100,314
V 5.24 15,595 15,240 15,496 15,756
VI 5.12 19,913 19,213 19,512 19,816
VII 5.03 35,718 32,504 33,411 34,344
VIII 5.04 12,132 10,980 11,146 11,314
IX 5.18 14,040 13,293 13,582 13,879
X 5.06 12,818 12,152 12,418 12,690
XI 4.86 29,327 28,484 29,224 29,984
XII 5.16 12,087 10,692 10,913 11,141
ARMM 6.13 15,421 15,775 16,385 17,016
CARAGA 5.32 6,924 6,525 6,631 6,739
TOTAL 406,777 371,168 381,239 391,616
26
THE HUDCC
THE REPORTING SYSTEM
As the lead agency in the implementation of the government’s housing

program, HUDCC requires the key shelter agencies to submit monthly
accomplishment reports.
The reports required to be submitted follow:
Key Shelter Agency Title of Report
NHA • No. of Projects Implemented (by Program/Region)

• Production Starts and Completions (by Program/Region
• NSP:
¾ Shelter Security Units (by Program/Region)
¾ Housing Investment
• Status of SONA Commitments – Summary by Program/Region
HDMF NSP and SONA Accomplishment Report under the following programs:
¾ End-user Financing
¾ Institutional Financing
NHMFC • Accomplishment Report
• Monthly Status Report of CMP Projects Taken-out
HLURB • Residential Projects Issued Licenses to Sell
• Licenses to Sell Issued
HGC • New Guaranty Enrollments
HUDCC also prepares the following reports:
• Accomplishment report on the Mt. Pinatubo Resettlement and the NGC East-West
Project (“on need basis”)
• Summary of Signed Presidential Issuances (monthly)
In addition to the above-enumerated reports, the following agencies are required

to submit accomplishment reports “on a need basis”:
Agency Title of Report
LBP • Report on Loans on Mass Housing

GSIS • Summary on Bahay Ko Program Production Report
DBP • Project Status on Developmental Financing and Individual
Housing Loans
SSS • Accomplishment Report on developmental financing, end-user
financing and Acquired assets with the following information:
¾ Target
¾ Actual
¾ Problems encountered in the implementation
¾ Measures adopted to address the problem/issue
27
THE HUDCC
Agency Title of Report
CREBA • Updates on the Housing Production and Accomplishment with

the following information:
¾ Project Name
¾ Developer
¾ Project Type
¾ No. of Units Pledged
¾ Completed Units
¾ Units Under Construction
SHDA • Accomplishments with the following information:
¾ Name of Developer
¾ Project Name
¾ Location
¾ Classification
¾ No. of Units Pledged
¾ Completed Units
• Summary of Applications with the Dept. of Agriculture
On the basis of these documents, HUDCC prepares the National Shelter

Program (NSP) Accomplishment Report and the Cumulative SONA
Accomplishment Report. The latter is submitted to the Presidential
Management Staff under the Office of the President.
TARGETS AND ACCOMPLISHMENTS
Tabulated below are the significant targets and accomplishments of HUDCC

for CY 2003:
Activity Output Target Accomplishment
Provision of security of • Households provided with security of 150,000 76,110

land tenure to urban tenure
poor families through
Asset Reform Program
or Presidential
Proclamations
Post-proclamation stage • Local Inter-Agency Committees 5 11
(LIAC) created
• LIAC meetings conducted variable 55
• IRRs formulated 5 11
• Census/tagging conducted variable 11
• Boundary/perimeter survey conducted variable 11
• Subdivision/ development plan variable 11
prepared
• Certificate of Eligibility for Lot variable 10,500
Allocation distributed
Implementation of • LIACs organized 59 43
special projects • Families censused and structures 85,290 44,950
tagged
28
THE HUDCC
Activity Output Target Accomplishment
• Consultation meetings conducted 64 62

• % of total area of property verified 100% 100%
• Structural maps prepared 38 37
• Development Plan formulated 46 36
• Homelot surveyed/ generated 83,068 31,289
• Beneficiaries selected and deliberated 65,620 11,120
Administration & • Consultation meetings conducted 72 96
management of the • Families provided security of tenure 1,140
Philippine Centennial • Housing units maintained/ 1,140
Village administered
Implementation of the • Applications received & evaluated 9,216 9,157
National Government • Applications endorsed for validation/ 5,530 3,085
Center Housing Project, prequalification
East & West • Applicants validated/ prequalified 4,800 2,356
• Applicants granted with pre- 892 990
qualifications
• HOAs assisted for project 2 5
implementation
• Structures inspected for compliance 1,417 1,000
with Plans
• Beneficiaries executed CTS 297 500
• Beneficiaries executed DOAs 82 100
• TCTs individualized for distribution 1,444 1,500
to beneficiaries with DOAs
• TCTs negotiated for acquisition 12 10
• TCTs prepared for reconstruction/ 50 20
resconstitution
Mt. Pinatubo Program • Families screened in resettlement sites 25,000 33,651
• Certificate of Housing Allocation
(COHA) generated 6,000 1,743
• Qualified Mt. Pinatubo victims
entitled to housing assistance 10,518 937
• Applications reviewed/ assessed for
Pinatubo Housing 4,542 2,016
Conduct of sectoral • Performance monitoring reports 5 5
performance monitoring prepared and updated
and assessment • SONA reports updated/ prepared 6 6
29
THE HUDCC
ORGANIZATIONAL STRUCTURE
HUDCC
Office of the
Chairperson Office of the Vice
Chairman
Office of the Sec.

General
Exec. Mngt.
Staff.
Document
Tracking
Office of the Deputy Sec. Office of the Dep. Sec.

General for Policies, Gen. for External
Plans and Programs Linkages, Internal
Admin. & Legal
Formulation and Presidential Internal Admin.

Monitoring Group Proclamations And Finance
Group Group
Special Concerns Post Proclamations

Group Group
Legal Group
30
THE HUDCC
MANPOWER COMPLEMENT
As of December 31, 2004, HUDCC is manned by a total of 118 workforce

under the following status:
Office Manpower
HUDCC Plantilla 79
NGC Plantilla 24
Contractual 15
Total 118
FUNDING SOURCE
The funds for HUDCC’s programs and projects are provided by the national
government. The total funds released for CY 2003 amounting to P 50,661,419
are summarized as follows:
Programs/Projects Amount Released
A. Programs
1. Gen. Adm. & Support P 12,313,086

Services
2. Operations 28,495,440
B. Locally-Funded Projects 9,852,893

Total P 50,661,419
31
Part IV
Audit Observations
32
Chapter 1
Sound Shelter Planning and Coordination
33
SOUND SHELTER PLANNING AND COORDINATION
INTRODUCTION
For programs implemented by a number of government agencies, planning and

coordination is crucial in ensuring the attainment of the program objective. A
well and carefully planned and coordinated program could be easily
implemented and monitored. Factors considered in planning may include the
participating agencies, their respective roles and responsibilities, target
beneficiaries, funding source and requirement, period and manner of
implementation and expected output.
Effective planning would also ensure significant contribution of each agency in

the attainment of sector’s overall target.
The team noted that HUDCC set the target without proper coordination with the
implementing agencies resulting in its failure to meet the targeted
accomplishment.
OBSERVATIONS
1. HUDCC committed to accomplish 1.2 million units during the

period without coordination with the implementing agencies. Thus,
only 892,216 units or 74.35% were accomplished as of September
2004.
As discussed earlier, HUDCC reported on year 2000 that for the period
2001 – 2004, the total housing need would be 3,623,830 or an average of
905,957 annually. While the needs were already determined, HUDCC has
not prepared a comprehensive plan to address this concern. Moreover,
HUDCC targeted to provide 1.2 million units or a third of the total need for
the period 2001 – 2004 without coordinating with the implementing
agencies. There were no documents forwarded to the team showing the
derivation of the 1.2M commitment and the list of agencies and private
sector committed to deliver the same.
As the HUDCC’s commitment was not properly planned and coordinated

with the implementing agencies, only 892,216 was reported accomplished
as of September 2004 representing 74% of the total commitment of 1.2
million units. This accomplishment may even be considered bloated due to
failure of HUDCC to establish indicators to measure overall
accomplishments. The reports of the implementing agencies were merely
34
consolidated. Thus, housing transactions that pass through two or more

agencies were reported twice or thrice.
The programs implemented by the different agencies and the needs

intended to be addressed follow:
Program Beneficiaries Loan Ceiling Committed Accomplishment
Low-cost • Eligible Pag-IBIG P225,000 to P2M 320,000 376,566

housing members &
borrowers of GFIs
• Low-income earners
up to 50%
Socialized • Families belonging P225,000 and 280,000 198,612

housing to the lowest 30% & below
occupants of
blighted/danger areas
• Eligible Pag-IBIG
members
• Pinatubo-affected
families
Land tenure • Bonafide residents of Not defined 600,000 376,566

the lots they occupy
Total 1,200,000 892,216
Management’s Response Team’s Rejoinder
Reference is made to Chapter 12 The team took note of the modest

(Expanding Access to Shelter) of the accomplishment discussed in the
Medium Term Philippine Development MTPDP. This may have been affected
Plan for 2001-2004, the document by weak coordination among housing
shows an assessment of the housing agencies and inadequate planning.
sector from1998 to 2000 and reveals
that the achievements in the provision
of mass housing were modest and that
the housing demand supply gap
remains as critical as ever in view of
rapid urbanization abetted by in-city
migration, rapid population growth and
formation of new households, and the
current slowdown of the country’s
economic growth.
Also, in the said plan, the housing It is true that the target of 1.2 million,
sector’s targets, policy direction and policy direction and strategies were
strategies were defined and as shown in defined in the MTPDP. There was,
Table 12.4 (Target Households, 2001- however, no explanation how 1.2
35
2004) sources of data were identified million was arrived at considering that
for the targets and the attendant funding the housing backlog alone was already
requirement. The formulation of the computed to be more than 2 million.
Medium Term Philippine Development
Plan was accomplished through a
Technical Working Group comprised
of representatives from the shelter
agencies and the private sector.
For purposes of planning and While the target may have been
coordination, said targets have been communicated with the shelter
communicated to the NHMFC in a agencies, there were no documents to
series of meetings with HUDCC and show that these agencies’ commitment
the other shelter agencies during the were sufficient to meet the housing
Plan preparation. sector’s overall target of 1.2 million. As
discussed in the report, the overall
accomplishment of only 892,216 units
equivalent to 74.35% of the target can
even be considered bloated.
In addition, in the audit report, two The team was not able to cover these
shelter agencies were not included in agencies due to limited manpower.
the audit of the implementation of the
housing program, the Housing and
Land Use Regulatory Board and the
Home Guaranty Corporation.
2. The NHA’s activities were not adequately planned adversely

affecting the housing sector’s overall performance. In several
projects, the NHA targets only 2 to 60% of the total affected
families. Thus, its contribution to the sector’s overall
accomplishment represents a meager 12%.
Housing Need/Requirement is the extent on which housing conditions fall

below the levels or norms considered necessary to provide healthy normal
living conditions. It also represents a number of housing units that must be
provided if the established norms are to be maintained in the future.
As reported by HUDCC, the Estimated Housing Need for CYs 2001-2004

is 3,623,630 or an average of 905,840 units yearly. The government
targeted to accomplish 1.2 million units for the same period on a yearly
target of 300,000 units.
36
Of the total target of 1.2 million units, only 892,216 units equivalent to
74.35% were reportedly accomplished as of September 2004. This
unsatisfactory performance was affected by the failure of the implementing
agencies to adequately plan their activities.
Records show that in five infrastructure projects affecting 112,340 families,

the NHA targeted to relocate only 2 to 60% of the affected families
equivalent to only 27,304. Of this target, only 5,615 were actually relocated
as tabulated below:
Affected Per RDSD Accomplishment Report as of June 2004

Families as
of Oct. 2000 No. of No. of
per Report Families for % Families
Project to HUDCC Relocation Targeted Relocated Remarks
KAMANAVA 7,200 4,300 60 4,300 - Relocation completed

1999-2000;
- Balance - 2,900
Estero Clearing 42,000 21,820 52 773 - To be accommodated in
Calauan, Laguna - 4,924
- Resettlement site to be
identified - 16,123
- Balance - 20,180
Mangahan 10,787 14 13 4 - Relocated to KV 1
Floodway - Relocation suspended - 9
Northrail 17,353 365 2.10 365 - Relocation completed
in 2003
Southrail 35,000 693 2.3 61 - Relocated in Cabuyao,
Laguna
- Relocated at PNOC
Housing Site, Sta. Mesa
112 112 - Conduct of census and
tagging operation/
occupancy verification
on-going
Total 112,340 27,304 129 5,615
This is despite funding support released by the National Government for

Resettlement Projects amounting toP6.91B exceeding the P5.2 B fund
commitment under RA 7835 (CISFA) as follows:
Total CISFA GAA

Funding Year Appropriation SARO Obligation
Resettlement P 700.000 1995 P 536.500 P 506.825 P 498.394

(P5.2B) 700.000 1996 131.774 930.224 910.989
700.000 1997 420.000 1,035.150 1,019.936
700.000 1998 695.000 319.797 319.418
700.000 1999 624.001 534.000 533.399
700.000 2000 1,807.240 1,107.000 1,106.910
500.000 2001 977.000 880.000 859.367
500.000 2002 400.000 446.051 438.316
37
Total CISFA GAA

Funding Year Appropriation SARO Obligation
- 2003 410.000 300.000 281.025

- 2004 810.000 860.000 668.019
Total P 5,200.000 P 6,811.515 P6,919.047 P6,635,773
The 1.2 M housing sector target was The team recognized that the 1.2 M
intended to be achieved by a collective target is a sectoral target intended to be
effort of government agencies and achieved through collective efforts of
private entities. These are the HUDCC, the housing agencies. As there was no
NHMFC, NHA, HDMF, Landbank, individual commitment from the
GSIS, SSS, and DBP on the housing agencies that would account
government side and the Subdivision for the 1.2 million, each agency’s
and Housing Developers Assn., Inc., accomplishment is crucial in attaining
(SHDA) and the Chamber of Real the overall sectoral target.
Estate Builders Assn., Inc., and other
organizations from the private sector. As discussed earlier, only 74.35% of
Individual agency targets were the sectoral target was accomplished.
determined on the basis of their It maybe noted that these agencies did
respective programs, the nature of their not also attain their respective targets as
inputs (e.g., financing, housing tabulated below:
development, proclamation of sites for
social housing, or technical assistance Year Target Accomplishment
to community associations) and their NHA
2001 39,574 27,350
projected level of resources. The 2002 34,436 22,683
magnitude of the targets or the 2003 48,909 16,132
contribution of each agency or entity 2004 34,238 21,136
relative to the sectoral target would Total 157,157 87,301
NHMFC
therefore be appropriately viewed on
2001 67,855 9,457
this basis. 2002 10,000 12,331
2003 18,000 14,026
2004 10,000 14,137
Total 105,855 49,951
HDMF
2001 51,680 25,947
2002 45,219 35,969
2003 56,250 46,499
2004 53,282 56,550
Total 206,431 164,965
On the observations relative to NHA’s The team is not questioning the NHA’s
accomplishment under the prioritization of its programs but its
Resettlement Program it should be practice of targeting only 2 to 60% of
noted that the targets under said the total affected families for
program during the 2001-2004 period relocation. With minimal percentage
38
Team’s Rejoinder
Management’s Response
were, to a considerable extent, affected relocated, the implementation of the

by the changes in implementation intended project will just the same be
priorities timetables and funding delayed.
concerns under two major projects –
the Northrail and Southrail
Resettlement Projects, the combined
target of which accounted for 45% of
the target under the
ResettlementProgram (and about a fifth
of NHA’s overall target for the period).
The Southrail Project was downscaled
and deprioritized while the full-scale
implementation of the Northrail Project
began towards the end of 2004.
Planning or defining annual or multi- The team agrees that proper and
year targets particularly for major adequate coordination among agencies
resettlement projects supporting major under the housing sector is crucial in
infrastructure projects such as the the attainment of its targets.
Northrail and Southrail development
projects is a multi-agency concern. It is
recognized that planning or targeting
for large-scale projects should be
closely coordinated with the agencies
concerned to attain consistency of
targets with implementation and
funding priorities and to ensure the
accomplishment of targets.
39
Chapter 2
Affordable Housing Units
40
AFFORDABLE HOUSING UNITS
INTRODUCTION
The housing market in the country may be classified in three categories:
Poor or marginalized sector – who cannot afford to pay for any type of housing
Low income sector – with low affordability but who can pay, given the
right package and some measure of financial
assistance
Middle/high income sector – who can afford to borrow at market rates
As reflected in the NSO statistics, families belonging to the low and

middle/high income sector allocate only about 14% of their income for housing
amortization or rental. The government housing projects then should take this
into consideration.
The audit, however, disclosed that the pricing scheme offered by NHA of
P679.40 to P2,130 were not affordable even to the lowest 30% income earner it
intends to serve.
OBSERVATION
The NHA’s prescribed floor prices for the socialized housing projects
were not affordable even to the lowest 30% urban income earners it
intends to serve under Executive Order No. 90. This contributed in
NHA’s arrears ranging from three months to five years amounting to
P1,929,509, low collection efficiency of 11.66% and a number of
unawarded and idle units in several projects. This condition not only
wasted government’s resources but defeats the very purpose and
objective of the government’s housing program.
Affordability refers to the paying capacity of housing beneficiaries to purchase

or lease a serviced lot, house and lot package or housing unit under any of the
programs outlined in RA 7835, taking into consideration the final
resources/expenditures of the beneficiaries on minimum basic needs in relation
to cost of housing development and viability of financing schemes.
41
In order to make the housing program affordable to homeless underprivileged

citizens, the government provides socialized housing scheme. Socialized
Housing refers to housing programs and projects covering houses and lots or
mere homelots undertaken by the government and or private sector for the
underprivileged and homeless citizens which include sites and services
development under long-term financing, liberalized terms on interest payments,
and such other benefits.
Under Executive Order No. 90, NHA is mandated, as the sole government
agency engaged in direct shelter production, to focus on the provision of
housing assistance to the lowest 30 percent of urban income earners.
As disclosed in the NSO statistics report, families belonging to the low and
middle/high income sector allocate only about 14% of their income for housing
amortization or rental. Substantial percentage of the family income is spent for
food and other expenses as reflected in the expenditure pattern chart:
Expenditure Pattern: 2000
Recreation Others
0.5% 18.4% Food at home 38.7%
Rent/Rental Value of dwelling

unit Food outside home 5.0%
14.2%
Fuel,light & water 6.3%

Households Operations
2.3%
Personal Care & Effects Transportation & communication

Education 6.8%
3.6%
source: NSO 4.2%
The said report also showed that the lowest 30% population was earning an
average annual income of P8,026 to P55,001. Considering the expenditure
pattern of 14% for dwelling unit, these families can only afford to amortize
about P95 to P650 a month as tabulated below:
Total Average Monthly Amortization

Number of Annual Affordability Tower Bagong
Families Income Level % MRH Ville Silang
15,269,655 P144,039 100 P750 – P629.40 – P 50 *

35,556 8,026 94.97 .2 P2,130 P909.27 P841 –
329,012 16,040 189.81 2.2 P1,117
836,651 25,434 300.97 5.5
1,170,541 35,143 415.86 7.8
1,388,507 44,968 532.12 9.1
1,196,126 55,001 650.85 7.8
4,956,393 326
42
Total Average Monthly Amortization

Number of Annual Affordability Tower Bagong
Families Income Level % MRH Ville Silang
1,983,219 69,319 820.27 12.9

1,496,280 89,599 1,060.25 9.8
8,435,892 55.3
2,431,060 122,080 1,444.61 15.9
2,382,193 191,913 2,270.97 15.6
1,528,433 337,256 3,990.86 10.0
492,077 939,397 11,116.20 3.2
* offered to original tenants only
The team, however, noted that the projects developed by the NHA require
monthly amortization of P629.40 to P2,130. These then were not affordable to
the intended beneficiaries. The only affordable project was a resettlement
project in Bagong Silang, Caloocan City which is available only to original
tenants at P50 per month.
The NHA projects and their respective prices follow:
Projects Price/Rental Rates
Medium Rise Housing Projects

Floor area Floor
(sq.m.) Year 4th & 5th 3rd 2nd 1st
22.5 1-3 750 1,000 1,200 1,400

4 825 1,100 1,320 1,540
5 908 1,210 1,452 1,694
6 999 1,331 1,597 1,863
24.0 1-3 800 1,100 1,300 1,500
4 880 1,210 1,430 1,650
5 968 1,331 1,573 1,815
6 1,065 1,464 1,730 1,997
24 1-3 850 1,200 1,400 1,600
4 935 1,320 1,540 1,760
Karangalan Village Project 5 1,029 1,452 1,694 1,936
MRH 6 1,131 1,597 1,863 2,130
The NHA has MRH projects on the following locations:
¾ Malaria, Caloocan City

¾ Tala, Caloocan City
¾ Karangalan Village, Pasig City
¾ Smokey Mountain Development and
Reclamation Project
43
Projects Prices
Resettlement Project
Social Lot P841 per sq. m.
Economic Lots
Lots fronting roadways P1,015 per sq. m.
Corner lots P1,117 per sq. m
P50 per month or a total selling price of P50,000 for
original tenants of Bagong Silang
Awarded lots at BSRP,

Phase 1
Towerville Resettlement Project Inner

Prime A Prime B
(Bulacan) Lots
Price per P 1,500 P 1,960 P 2,167

sq.m
Total P 75,000 P 98,000 P 108,000
Selling
Price . @
50 sq.m.
Manner Lease for 5 years + CCS for 25 years
of
payment
Average P 629.40 P 822.41 P 909.27
Monthly
Amortizat
ion
This project is also offered for lease for 5 years

at the following rates for a standard 50 sq.m. lot.
Prime Lots
Inner
Year Lots A B
1* P 150 P 250 P 300

2 200 300 350
3 250 350 400
4 300 400 450
5 350 450 500
Additional rates
per sq.m. in excess P 3 P 5 P 6
of 50 sq.m.
44
This contributed not only in accumulation of arrears ranging from three months
to five years amounting to P1.929 billion and low collection efficiency of
11.66% but also unawarded and unoccupied units in several projects tabulated
below.
Awarded
Total No. of Waived Difference Unawarded units
Units No. Accounts (b–c) (a–d)
MRH (a) (b) (c ) (d) (e)
Karangalan 600 307 1 306 294

Malaria 480 424 424 56
Tala 840 625 625 215
Kamarin 180 0 0 180
SMDRP 2,520 905 905 1,615
Total 4,620 2,261 1 2,260 1,705
Under this condition, government resources are not only wasted but the very
purpose and objective of the government housing program was defeated.
Management’s Comments Team’s Rejoinder
Response by NHA
NHA implements various types of We understand the NHA’s predicament of

housing programs with varying products balancing financial viability and its social
(service lots, house and lot packages, and obligations of providing housing to
medium rise housing units) and for underprivileged and low-income families.
different clientele such as informal However, considering that the NHA’s
settlers/relocatees under the Resettlement projects are mostly funded by the national
Program and the Slum Upgrading government, which the NHA is not
Programs, and for formal sector families obliged to return upon collection from the
for the Sites and Services, Core Housing beneficiaries, then the NHA’s price
and Medium rise Housing Programs. The consideration should be more on
affordability level of the different affordability of the project to the intended
segments of the NHA’s clientele as well beneficiaries than viability as a
as the funding utilized for the projects government corporation.
(subsidy, trust funds, corporate funds,
borrowings) are factors considered in
NHA’s pricing and repayment policies.
While recognizing the social objective of
providing housing to underprivileged and
low income families, NHA’s overall cost
recovery policy also balances and
considers its concern for financial
viability as a government corporation.
45
The following explanation/comments are

given by way of clarification:
- Resettlement Program. There are

currently three sets of pricing policies
which are operational under the
Program:
The first is covered by Presidential This only manifests the government’s

Decree 2015 which mandates desire to address the housing concern of
charging of monthly amortization of the underprivileged members of society.
P50 regardless of the cost of housing
units. The amortizations shall be paid
over a period of 25 years without
interest. The Decree covers specific
resettlement projects in Bagong Silang
(Tala) in Caloocan City, Sapang Palay
in Bulacan, Bagong Nayon II in
Antipolo, Dasmarinas Bagong Bayan
and General MarianoAlvarez in Cavite
and San Pedro in Laguna. These
scheme covers the P50 amortization
cited in the audit report.
The second intended for “illegal The team agrees that for “illegal
occupants” or those who are not the occupants”, separate pricing scheme
intended beneficiaries of the project. should be formulated. Even then, the
Given the nature of their occupancy of scheme should also consider the
the units, relative to that of bonafide affordability level status of the
awardees, and for purposes of beneficiaries. This is oftentimes the very
legalizing the same, pricing is based reason of beneficiaries’ resistance to pay.
on total project cost for social lots and
on current fair market value for
economic and residential lots. The
Bagong Silang example given in the
audit report exemplifies this pricing
scheme.
Pricing for new resettlement sites. The team does not have yet pricing
Prices of units (services lots or house scheme for these projects. Hence, we
and lot packages) are subsidized where could not assess whether the rates are
certain project costs such as the cost of affordable or not.
community facilities and relocation
costs are not recovered from
beneficiaries. Payment terms have
been liberalized with low starting lease
rates under an escalating payment
46
scheme, crediting of lease rates to the

price of the units, subsidized interest
rates and a moratorium on payment.
This pricing will cover all the
estimated 86,000 families to be
resettled under the Northrail and
Southrail Resettlement Programs.
Instead of availing of the lease with As discussed earlier, the price of P629.40
option to purchase scheme, to P909.27 could no longer be considered
beneficiaries may avail of either the affordable to the lowest 30% wage
buyer’s financing facility of the Pag- earners based on the NSO Survey.
ibig Fund or enter into a Conditional NHA’s records show that out of 6,432
Contract To Sell with NHA. This allocated residential units, 1,685
scheme is exemplified in the monthly remained undisposed while 655 were
amortization for the Towerville still unallocated as of Oct. 2004.
Resettlement Project cited in the Audit
Report.
Medium Rise Housing Projects. The As tabulated in the report, 1,705 of these
implementation of the Medium Rise units remained unawarded which may be
Housing Program by the NHA was due among others, to affordability level
mandated under Republic Act 7835 or of intended beneficiaries.
the Comprehensive and Integrated
Shelter Financing Act and is funded
mainly out of (cost recoverable) Trust
Funds provided by the national
government. This is intended to be a
demonstration program to introduce
the market to density housing in
highly urbanized areas which
maximizes the use of scarce and
relatively high-cost urban land. It is
also intended to address the need for
additional housing stock in high
density areas such as Metro Manila
and other key areas in other regions.
By the very nature of the product, the

cost of medium-rise housing units is
beyond the socialized housing
category as defined by HUDCC:
P180,000 at the time the program was
started and presently, at P300,000.
Medium-rise housing units are either
leased or sold. Current lease rates
range from P750 to P1,600 for the first
47
three years with adjustments starting

the fourth year. Buyers of units are
intended to come from the formal
sector and shall utilize external
buyer’s financing facilities.
The audit report observed that projects The team was not provided with the
developed by NHA are not within the source data on average income
affordability level of the within Metro Manila. With the given
intended beneficiaries based on the income and considering the results of
2000 Family Income and Expenditures NSO’s survey that only about 14% of the
Survey of the National Statistics total income is allocated for housing,
Office. It is observed however that the these beneficiaries could only afford an
income distribution for the entire amortization payment of only P181 to
Philippines was used where the P1,454. The prices then of the medium
resulting affordability level ranges rise buildings which is available in Metro
from P95 to P650. Applying the Manila at P750 to P2,130 are still not
income distribution for the National within the reach of the marginalized and
Capital Region, where the projects underprivileged members of our society.
cited in the audit report are mostly
located (or where the beneficiaries
originate) shows that the average
monthly income of families belonging
to the lowest 30% range from P1,298
to P10,387 with corresponding
affordability level ranging from P290
to P2,327 per month. This matches
the lease rates or monthly
amortizations for the socialized
housing units in NHA’s projects.
Considering the eroded financial The team considers this move beneficial
capabilities of its target clientele, NHA to the clients of NHA, and would surely
has pursued certain policy reforms to ease contribute in easing the housing problem.
the financial burden on its beneficiaries
such as the lowering of interest rates and
extension of repayment period. These
apply not only to new awardees but also
to existing awardees. NHA is also
proposing to apply the lease with option
to purchase or escalating payment
schemes used as alternative schemes for
beneficiaries of other programs.
Given the social bias of its mandate and It maybe true that the issue on
programs, NHA should continuously affordability may not be the only reason
48
strive to pursue new schemes and for high arrearages, low collection
approaches to provide more affordable efficiency and unawarded units, but it
housing and make its programs more definitely contributed in the presence of
responsive to the needs of its clients. these conditions.
The issue of affordability however, may
not, by itself, lead to or explain high
arrearages, low collection efficiency or
unawarded units as observed in the report.
49
Chapter 3
Efficient Collection of Loan Amortization
50
EFFICIENT COLLECTION OF LOAN AMORTIZATION
INTRODUCTION
In view of limited funds, the government could not set aside adequate budget to
address, at the same time, all housing needs of underprivileged sector of our
society. For this reason, apart from government appropriations, loan recovery
provides liquidity to the housing finance sector.
As a matter of policy, the amount being set aside and actually spent for our
housing needs are required to be repaid by the beneficiaries. This is intended
to address the needs of another beneficiary. Thus, for the housing program to
be successful, it should not only ensure shelter provision for the homeless but
efficient cost recovery as well.
The audit, however, disclosed that the implementation of NHA’s, NHMFC’s

and HDMF’s programs were affected by their failure to collect monthly
amortizations on time. Their collection efficiency ranged only for 11.66% to
77.61%.
OBSERVATION
NHMFC demonstrates better collection efficiency of 77.61% on

current accounts compared with 11.66% of the NHA. Likewise, about
22% of current individual accounts of HDMF were in arrears from 1
to 3 years. The collection performance of these agencies were
adversely affected by poor monitoring of loans, price deficiencies,
awardees’ indifference to pay, internal problems within the community
and implementing agencies lapses in implementation. These
conditions affected the ability of the government to construct additional
units for distribution to other qualified beneficiaries.
In order to ensure the successful implementation of the housing program wholly

or partially dependent on collection for funding, the implementing agency
should be able to define and attain the desired collection efficiency sufficient to
sustain continuous implementation of the program.
Records show that both NHA and NHMFC have not defined or established the
collection efficiency standard that would ensure uninterrupted and satisfactory
51
performance. On the other hand, the HDMF set collection target of 80% to
100% for individual housing loans and 85% to 90% for institutional loans.
In the case of NHMFC, while there is no clear declaration setting 80% as a

standard collection efficiency, various issuances required 80% collection rate
on previous project before a new project under the same originator is
accredited. Considering such as a standard, the reported collection efficiency
rating of NHMFC of 77.61% on regular accounts, 32.13% on accounts for
referral to Legal Group and 16.19% on accounts under litigation as of June
2004 could be considered below par. There were likewise no studies or reviews
undertaken to prove that the 80% collection efficiency could already sustain
continuous implementation of the NHMFC’s programs. This record is,
however, far better than the collection records of NHA and HDMF.
The NHMFC’s collection profile is shown below:
Collection Profile
1,600.000
1,400.000
1,502.385
1,200.000
1,165.941
1,000.000
77.61%
A mo unt
(in millio n) 800.000
600.000
400.000 611.825
200.000 51.202 107.992

159.346 32.13% 17.65%
0.000
Regular Account s For Ref err al t o Legal Gr oup It ems f or Lit igat ion
Total Billing Collection
The NHA’s collection performance, comparatively speaking, could be

considered far behind. Of the total collectibles of P2,184.268 billion for CY
2003, only P 254.759 million was collected equivalent to collection efficiency
rating of only 11.66%. The team’s computation did not include yet penalties
and interests:
CY 2003
Collectibles from Collection

Nature of Receivables CY 2003 Sales & Total Amount Due Actual Collection Efficiency
Receivables 1/01/03 Accruals *** Rate
Rental P 919,260,624.99 P 198,011,805.59 P 1,117,272,430.58 P 12,106,643.11 1.08%

Cash Sales**
NCR 54,240,026.10 7,705,733.46* 61,945,759.56 4,489,096.09 7.25%
NCL 9,629,469.90 4,528,966.33* 14,158,436.23 2,719,948.44 19.21%
52
CY 2003
Collectibles from Collection

Nature of Receivables CY 2003 Sales & Total Amount Actual Collection Efficiency
Receivables 1/01/03 Accruals Due *** Rate
SLB 44,351,878.98 311,169.95* 44,663,048.93 241,570.81 0.54%

Visayas 14,877,066.57 2,126,116.10* 17,003,182.67 924,387.88 5.44%
Mindanao 8,101,226.17 1,118,779.83* 9,220,006.00 1,671,266.17 18.13%
EMD 2,980.92 3,085.60* 6,006.52 0.00 0.00%
Sub-total 131,202,648.64 15,793,851.29 146,996,499.93 10,046,269.39

Installment Sales
NCR 252,728,797.01 252,728,797.01 100,335,705.42 39.71%
NCL 38,701,944.46 38,701,944.46 28,148,637.14 72.73%
SLB 112,313,662.18 112,313,662.18 53,147,814.50 47.32%
Visayas 38,091,303.15 38,091,303.15 19,665,946.49 51.63%
Mindanao 44,335,227.92 44,335,227.92 15,302,451.56 34.52%
EMD 4,515,715.74 4,515,715.74 1,668,350.98 36.94%
Gov’t. Center 50,270,102.90 50,270,102. 90 2,756,549.28 5.48%
Sub-total 540,956,753.36 540,956,753.36** 225,730,283.55
Mortgage Sales
NCR 30,379,097.22 30,379,097.22 639,000.00 2.10%
NCL 12,967,739.94 12,967,739.94 0.00 0.00%
SLB 213,304,222.08 213,304,222.08 5,624,150.49 2.64%
Visayas 80,233,869.65 80,233,869.65 162,136.60 0.20%
Mindanao 42,157,642.74 42,157,642.74 450,704.70 1.07%
Sub-total 379,042,571.63 379,042,571.63 6,875,991.79
Grand Total P1,970,462,598.62 P213,805,856.88 P2,184,268,255.50 254,759,207.84 11.66%
Note : * Team’s Computation (Receivables from Cash Sales – Total Collectibles)
** Source: Accounting – Customer’s Account Division
*** Source : Project’s Individual Subsidiary Ledger – Accounting – General Account Division
On the other hand, the HDMF targeted for CY 2003, a collection efficiency of
80% to 100% for individual housing loans and 85% to 90% for institutional
loans broken down as follows:
Individual Housing Loan:

• Current – 100%
• 1 -3 months in arrears – 97%
• 4 -6 months in arrears – 85%
• 7 – 9 months in arrears – 80%
Institutional Loan:
• For existing project – 85%
• For projects approved in 2002-2003 – 90%
While targets were set for each category, these targets were apparently not
being monitored. The team could not be provided reports on whether or not
these targets are being achieved.
As of December 31, 2003, 410,471 accounts were maintained and monitored by

the HDMF and reported in different status in the Mortgage Contracts
Receivable (MCR) Status Report as tabulated on the next page.
53
Status No. of Accounts Amount
Fully paid 69,555 P 11,384,579,017

Bought back 4,221 951,590,456
Acquired Assets 16,334 2,845,190,771
Foreclosed 23,483 4,200,781,513
Cancelled CTS 6,735 1,343,887,447
Items Under Litigation 34,326 7,464,784,312
Lahar Affected 233 17,387,022
Others 474 0
Outstanding 255,110 59,809,570,444*
Total 410,471 P 88,017,770,982
* Book value (Principal balance on all outstanding accounts) = P54.535 B
Analysis of the 255,110 outstanding accounts showed that around 61% can be
considered current while a significant percentage is between 1 to 3 years in
arrears as tabulated below:
No. of % Book Value (in

Status Accounts to Total thousand P)
Current 95,129 37.29 60.69 P 20,509,643

1 – 3 months 59,706 23.40 12,823,609
4 – 6 months 23,115 9.06 4,954,609
7 – 12 months 21,643 8.48 4,572,274
> 1 year 17,730 6.95 3,741,168
> 2 years 9,562 3.75 21.56 2,065,387
> 3 year 27,709 10.86 5,779,799
Unoccupied >9 mos. 516 0.20 89,051
Total 255,110 100.00 P 54,535,540
The team further noted that of the 255,110 outstanding accounts, 6,500
accounts have no single amortization payment since take-out:
No. of Months No.

with no payment of accounts
1 – 12 months 3,578
> 12 months 2,922
Total 6,500
Similarly, out of the institutional loans granted to 120 developers with

outstanding principal balance of P2.027 billion as of December 31, 2003,
P501.384 million were already past due for about six months to over 3 years as
illustrated on the next page.
54
No. of % Book Value

Status Developer to Total (in P ’000)
Current (0-180 days) 66 75 % P 1,525,723,436.78

Past due (6 mos. to < 3 years) 54 25 % 501,774,535.33
Total 120 100 % P 2,027,497,972.11
As gathered from the records of these agencies, their collection performance

was adversely affected by the following circumstances, among others:
Agency Category Reasons
NHA Price Deficiencies • resistance to pay new price;

• no approved price;
• reliance on government’s dole-out;
• high interest and amortization compared with other housing
agencies;
• request for price reduction and project reclassification from Sites
and Services to Resettlement;
• mature account not covered by MC 1671
• request to qualify for condonation program;
• financial difficulty.
Problem on awardees • non-residency of majority of awardees;
• water facility not in operation;
• attitudinal problems;
• double/multiple awardee;
• cultural belief that imposing penalty and interest is usury;
• paying is not a priority;
• conflict between previous and present HOA officers, non-
compliance with Individual Notice of Award
• absence relocatee-families;
• non-compliance of beneficiaries with regular billing;
• organization group filed a case for reversion and cancellation of
NHA’s CTC;
NHA’s lapses in • missing title of turned – over property to NHA;
implementation • processing of documents by the Legal Dept. is taking time;
• no strict sanctions for the delinquents;
• lack of manpower;
• delayed generation of statement of accounts;
• lack of regular service vehicle;
• unattended problems such as damaged site cause by typhoons or
vandalized power and water line;
• no approval of subdivision plan;
• with request for lower amortization;
• no approved result of resurvey.
NHMFC Problem on awardees • Economic crisis
• Lost of trust/confidence to officers due to irregularities/absence of
internal control, conflicts and non-remittance of collection to
NHMFC. This is true in the case of Libis Bulelak HOA. The
registered collection efficiency of the Association as of December
2003 of 75.99% dropped to 70.76% as of June 2004. Interview
conducted by the team revealed the following:
¾ Association President does not accept payment because

another person is paying for the lot.
55
Agency Category Reasons
NHMFC ¾ Beneficiary does not know whom to pay since there are two
sets of officers.
¾ Beneficiaries stopped paying since the lot is being claimed by
another.
¾ Beneficiary suspended payment since the lot size is not
commensurate with the monthly amortization payment.
¾ The units were occupied by persons other than the NHMFC’s
registered beneficiaries and sometimes being
paid by another person.
¾ Beneficiaries sold their rights to third party. This is particularly
true in the cases noted during inspection at Libis Bulelak
HOA.
• Inadequate information/awareness of the CAs on the CMP
collection system
• Hazard/risk in the project location/area to conduct collection
campaign.
• Unlocated beneficiaries in off-site projects.
• Non-cooperation of Originators and Officers.
NHMFC’s lapses in • Low occupancy rate as in the case of North Triangle HOA:
implementation
¾ Only 158 or 44% of the 360 member-beneficiaries have
occupied the site as of September 2004 which is below the
required 70% occupancy prescribed under Corporate Circular
No. CMP-023. Collection Efficiency Rate of the CA is only
51.06% in June 2004 and 54.24% in October 2004.
¾ Of the 158, only 148 were paying and only 10 have updated
records while 105 beneficiaries were in arrears from about 4
to 13 months.
¾ Of the 202 beneficiaries who are not yet occupying the site,
only 163 are paying, of which only 37 beneficiaries have
updated accounts while 82 beneficiaries are in arrears from
about 4 to 12 months, respectively.
¾ The failure of beneficiaries to immediately occupy the site was
claimed to be due to lack of permanent source of income and
absence of employment opportunity in the area.
• Absence of individual ledgers of beneficiaries.
• Delayed submission by the authorized collecting banks of Mortgage
Bank Receipts/Remittance Reports/Abstract of Collection.
HDMF Problem on awardees • Unemployment – most of the delinquent borrowers are unemployed
and have no other means to pay their housing loan amortizations;
• Financial predicament – the borrowers are the sole breadwinner of
the family and part of their income is use to defray expenses for a
sick family member, education of their children/siblings and other
family needs;
• Death of the principal borrower – beneficiaries have no other means
to continue paying the monthly amortization;
• Some borrowers refused to update their accounts or have stopped
paying their amortization due to their pending case with their
respective developers.
• Unreconciled accounts/delayed remittance of payments made thru
banks/branches;
• Others – abandoned and unoccupied housing units. Borrowers
refused to occupy the units due to defects.
56
Some of these concerns were being addressed by the implementing agencies

thru the following:
Agency Measures Reforms Undertaken
NHA Policy Reforms and Strategies • issued guidelines for revision of pricing policy
for Revenue Generation supported by cost control measures (Memo. Cir.
issued in CY 2003 No. 1805 dated Apr. 29, 2003);
• shift to end-users financing for formal sector
(Memo Cir. No. 1807 dated May 9, 2003); and
• conversion of lease contracts to sale for MRH
formal sector beneficiaries (Memo. Cir. No.
1809 dated May 9, 2003).
Options offered in June 2003 • Extension of Repayment Period;
to Community Associations • Revised Interest Rate;
(CAs) • Resale of Lots; and
• Loan Individualization.
Extends period of availment • Of the total potential availees nationwide of
of penalty condonation under 39,056, only 14,122 or 36.16% actually availed
Board Resolution No. 4665 of this program.
dated 2/27/03.
NHMFC Intensify Collection • Send out demand letters or notices to delinquent
Campaign and Awareness CA’s/MB’s quarterly. There were, however, no
further action taken after the demand letters
were served;
• Apply, if possible, Time Deposit proceeds/Cash
Deposit to CA’s account with CER below 80%.
To a certain extent, the application of CTDs are
not that easy and needs concurrence by the CA
officials;
• Conduct orientation sessions at the NHMFC’s
office with prior notice to the CAs to discuss all
issues;
• Furnish Regional/Zonal Offices with Quarterly
CER report and seek their assistance in
conducting collection campaign in CA’s with
poor CER;
• Request officers/beneficiaries of all taken-out
projects to attend the collection/ledgering
seminar;
• Provide Project Unitization Department with
listing of CA’s with low CER to promote
individualization of TCT. Based on interview,
the Project Unitization Department sent notices
to CAs due for individualization. This, however,
did not improve the status of individualization.
• Refer to the Legal Department/Group CA’s
under Litigation with arrearages of above 24
months amortizations.
Apparently, these measures were not sufficient to improve collection efficiency.

The failure of these agencies to collect on time resulted in lack of funds to
construct additional units for distribution to other beneficiaries.
57
Response by HDMF
The primary objective of adopting this As discussed earlier, while HDMF has set
scheme of setting the housing loan collection targets both for individual and
collection target based on the status of institutional housing loans, the attainment
Aging Report as of Dec. 2003 was to of these targets were not at all monitored.
come up with a planning parameter that There were no reports forwarded to the
can be uniformly implemented by all team that would reflect the attainment or
operating units, and at the same time, will non-attainment of the set target. Not even
facilitate validation of their proposed the aging report would reflect the status
targets. The assumption of collection of collection efficiency.
efficiency rate was exclusively to
estimate the projected housing loan
collection based on collectibles from
various account categories. To monitor
collection by category, considering that
movement of accounts across various
ages of accounts over time is erratic,
posed greater difficulties without the aid
of information technology. What is being
monitored, however, is the actual loan
amortizations collected vis-à-vis
collection target that is estimated based
on collection efficiency rate adopted per
category. To monitor the status of
accounts based on age classification is
already captured by the aging report
submitted regularly to Finance Group.
Nonetheless, we appreciate COA’s The team appreciates the efforts HDMF is

comment, as we acknowledge the exerting in order to address the problem.
importance of the micro view of However, the ultimate objective is not
collection performance by status of aging merely to monitor loan repayments or
of accounts fixed on a certain date, i.e., attainment of the target set but rather to
end of Dec. 2003 for 2004 collection improve collection performance.
performance. This may need a special
computer program to capture the new
information requirement which can be
treated as a different and distinct
monitoring of the status of aging of
accounts in addition to the status of aging
of accounts we generate quarterly. We
are planning to introduce in our regular
monitoring reports.
58
Response by NHMFC
The 80% overall CER for CMP has been As discussed in the report, a number of
the target of NHMFC for the past four factors affected NHMFC’s collection
years but remains unattained. NHMFC performance. Nonetheless, the team
is in the process of reassessing this target acknowledges the efforts being exerted
and realistically, may scale it down to by the NHMFC in its quest to further
78%. improve its performance.
Be that as it may, not being able to

achieve the 80% CER for the Program
from 2001-2004 should not be
attributed primarily to poor monitoring
of loans by the NHMFC. Under the
CMP, the matter of collecting from
member-beneficiaries of their individual
loan apportionment is the responsibility
of the CA Officers who remit the
amortizations to the Corporation. The
Association, under a Collection
Agreement executed with NHMFC, is
given an incentive of one percent (1%)
for total collections made on regular
amortizations.
Further, upon loan take out, the CA is

duly notified by NHMFC of their
schedule of payment and amount of
monthly amortization. If the CA, as a
whole, registers a low CER, which could
be due to arrears corresponding to six
months and above amortizations, the
NHMFC, (thru the CMP-Account
Management Department) sends them
collection reminders. Aside from the
collection notices, on-site collection
activities in the form of briefing,
orientation on ledgering, etc. are
conducted not only based on CA requests
but on findings after a collection
reporting period for projects which has
no payment since take-out, or is
registering a low CER, i.e., below 50%.
Moreover, the conflict within the

Association or the loss of confidence in
59
the CA officers could also affect the CER

of the project: a) the members refuse to
pay through their CA officers; or b) the
CA, while receiving amortization
payments, do not remit the same to
NHMFC.
Suffice it to note that NHMFC is looking

at means/measures for further improving
the CMP Collection system, coupled
with the move towards full
computerization of the Program.
Response by NHA
Under NHA’s Collection Program,

Total Amount Due is based on the Granting that only P1.447 Million and
receivables from individual beneficiaries P1.665 pertains to current account for
covering arrearages and current period CYs 2003 and 2004, respectively, the
potential for accounts under installment NHA’s collection efficiency of only 26%
sales, cash sales, interest-bearing loans is still far away from the targeted 80%
and rentals. Of this, an amount is and 63% collection efficiency for CYs
targeted for collection. NHA’s 2003 and 2004, respectively. It was also
collection performance as of 2003 and noted that instead of improving collection
2004 are as follows: target, the NHA’s target in CY 2004 was
down to 63%.
2003 2004
(P M) (P M)
The team, however, recognized the
Total amount Due 1,447.563 1,665.167 efforts being exerted by NHA in
Collection Target 1,159.051 1,059.414
Net Collection
improving its collection performance.
(excludes
delinquency charges 369.633 434.785
and advance
payments)
Gross collection 674.091 748.389
Performance
Collection vs. TAD 26% 26%
Gross Collection vs. 58% 71%
Target
NHA’ S collection efficiency for 2003, is

at 17% using COA’s figures for Total
Amount Due of P2.184 Billion. Said
amount however includes accrued rental
pertaining to the account of DOTC on the
lease of NHA’s 16-ha. property at the
North Triangle which has been inactive
for more than five (5) years.
60
The modest improvement in collection

performance particularly in terms of gross
collection is partly attributable to the
reactivation of the Collection Task Force,
which is responsible for overseeing
collection operations and pursing the
implementation of the collection
improvement strategies. The Task Force
is also directed to look into the collection
organization and management at the
project level as well as the problems
affecting collection performance.
Aside from the deficiencies mentioned in

the audit report which are being
addressed, a significant deterrent to
higher collection performance appears to
be the lack of enforcement of sanctions
for delinquency on payment of
amortization/rental among those
beneficiaries with sufficient financial
capability.
The report correctly observes the

apparently inadequate or ineffective
measures that have been taken to address
the high rate of delinquency in
repayment as indicated in the Aging
Report such as liberalization of pricing
and repayment terms, condonation of
penalties and restructuring. In an attempt
to turnaround the situation, management
is pursuing a shift to a legal approach
while maintaining existing collection
strategies.
This is intended to generate a more

responsible response from beneficiaries in
terms of repayment obligations. This is
also intended to demonstrate NHA’s
seriousness in securing compliance with
the terms and conditions of award and
provisions of the sales or lease contract.
At a strategic level, NHA is pursuing the

outsourcing of collection functions to
61
include account management and

servicing. Outsourcing will allow NHA
to avail of private sector efficiencies to
improve collection performance and
revenue generation.
62
Chapter 4
Well-defined Disposition/Distribution Policies
63
INTRODUCTION
The effectiveness of government agency is measured not only on the quantity of

the services delivered but also on the timeliness of its delivery. Any service, no
matter how material, would be of lesser value, if unnecessarily delayed.
Housing is considered a basic necessity, the absence of which affects not only
the physical condition of those in need but their emotional and sociological
behavior as well. Thus, further delaying the disposal of already available units
to intended beneficiaries is tantamount to disservice. In line with this principle,
the housing agencies should award available units to qualified beneficiaries on
time or as scheduled.
The audit disclosed that the implementing agencies do not have timeline for the
disposition of generated lots/housing units. In some cases, available units were
distributed only after 55 to 459 days. As of June 2004, there were 66,694
lots/units readily available but were not awarded to the beneficiaries and
another undisposed 19,172 acquired units defeating the very purpose for which
these units were generated.
OBSERVATION
Inadequate and/or strict policy on the disposition of available

lots/housing units and acquired assets resulted in the accumulation of
unawarded/undisposed lots/housing units. As of December 2004, there
were 66,694 undisposed or undistributed units and another undisposed
19,179 acquired units defeating the purpose for which these units were
generated and wasting government resources. Moreover, undisposed
units had to be securely guarded entailing added cost to avoid
vandalism and illegal occupancy by unqualified beneficiaries.
As reported by HUDCC, the total housing sector was able to accomplish

892,216 units from January 2001 to September 2004. These accomplishments
represent only about 74.35 of the total target of 1.2 million units.
The team noted that while accomplishment was already below the targeted
units, not all units were even disposed of/distributed to the intended
beneficiaries. As of December 2004, it was reported that 85,873 units remained
undisposed of/undistributed while another 19,179 acquired by the implementing
64
agency for failure of the beneficiary to amortize their loans remained on hand
as tabulated below:
Unawarded/
Implementing
Particulars Undisposed/
Agency
Reacquired
NHA Of the 337,081 total number of units available for distribution as of 66,380
December 2004, 306,701 units were awarded leaving 66,380 units
unawarded.
NHMFC The occupancy status of CMP projects was not monitored. The team
conducted inspection and verification of two CMP projects namely Libis
Bulelak HOA and North Triangle HOA with 675 and 360 beneficiaries,
respectively. Based on the Report of Actual Occupancy prepared by
Marikina Settlement Office as of November 5, 2004, 98 units at Libis
Bulelak were vacant. On the other hand, report of North Triangle HOA 218
showed that 158 units were occupied by beneficiaries as of September
2004. Constructions of housing units by 78 beneficiaries were reportedly
on-going as of that date. Thus, 120 units remained unoccupied by the
beneficiaries.
While the NHMFC deals with the respective associations and not on
individual borrowers, the presence of unoccupied units affects the
collection efficiency of the concerned association.
HDMF There were 26,818 units acquired as of Sept. 2004, of which 19,179 units 19,179
were not yet disposed.
NHA/Home There were three buildings consisting of 96 units intended to address the 96
Guaranty housing problem at the railroad track of which estate management function
Corporation was assumed by HGC in view of call of guarantee in 2002. These
buildings were constructed by New San Jose Builders, Inc. at NHA
properties. Negotiation for the purchase of NHA lot occupied by these 3
buildings is still on-going.
Total 85,873
This condition may have been adversely affected by inadequate policies for
disposing these projects. The guidelines should define, among others, the
following:
• the time frame for disposition of available units to the intended

beneficiaries;
• the intended beneficiaries;
• actions to be taken in case the intended beneficiaries did not avail of the
services being offered;
• alternative actions to be taken in case the existing strategies did not
succeed in disposing targeted units within predetermined deadline;
• the Office responsible for disposing all units and analyzing the
deficiencies in disposal policies; and
• reports to be rendered and the information needed to be reported.
In the case of HDMF, the policies for disposal of acquired assets are too strict
for compliance by the intended buyers.
65
The undisposed units consisting of lots or housing units readily available for
occupancy are located nationwide.
Sample of unawarded projects is presented below:
NHA Projects
Lots/Units
Project Name Generated Unawarded Remarks
Resettlement
Cabuyao 7,000 6,939 Intended for residents of South Rail.
Local officials resist transfer of
beneficiaries.
Sites and Services
Calauan 5,112 3,964 Intended for formal sector particularly
Housing LGU employees of the Municipalities of
Los Baños, Bay, Calauan, Victoria &
Pila.
965 Intended for informal settlers residing
along creeks/esteros and waterways.
Paliparan 4,288 4,251 No data
Medium-Rise Buildings
Camarin MRH 180 180 Completed on September 10, 2003 but
remained unawarded due to the absence
of a policy on disposition.
Camarin MRH – unoccupied buildings
Karangalan 600 240 Bldg. Nos. 1-4 structurally completed but

MRH without electrical and water installations.
The contract was terminated on June 8,
2004.
54 Units in Bldg Nos. 5-6 not yet awarded.
Karangalan Village Project MRH –

unoccupied buildings
66
Lots/Units
Project Name Generated Unawarded Remarks
Malaria 1,2, & 3 480 56 Units are either used as laundry area or
MRH storage of neighbors.
unawarded units
Malaria MRH
Tala MRH 840 215
Tala MRH – unoccupied units
Total 4,620 745

NHMFC Prpjects
North Triangle HOA North Triangle HOA

vacant lot vacant lots
Libis Bulelak HOA – vacant lot 1 Libis Bulelak HOA – vacant lot 2
67
HDMF Acquired Project HGC Project
Smile Citihomes, Quezon City Sariling Pabahay sa Riles
The failure of these agencies to dispose available units defeats the very purpose
for which these units were generated and wasted limited government resources.
In addition, delay in disposition deprived the government an opportunity to
recover its cost thru rental payments while incurring additional cost to secure
these properties from illegal occupants.
Response by HDMF
The non-payment of housing loan The team recognized the HDMF’s role in
amortizations of Pag-IBIG borrowers, providing affordable home financing
despite the Fund’s efforts to collect, left program and its mandate to foreclose
HDMF with no option but to proceed properties of accounts in default. We are
with the foreclosure of accounts in default also aware of the actions taken by the
as a last resort. It is directed for the HDMF in order to dispose foreclosed
immediate recovery of its housing properties. Hence, considering the
investments. To do otherwise, will increasing number of acquired properties
further erode the value of its investments that remained undisposed, the HDMF
and will be facing greater problems in the should revisit its policies and introduce
future. alternative marketing strategies to make
these properties attractive to the buyers.
As a government financial institution, it is
HDMF’s duty to fulfill its social mandate
of providing affordable home financing
program to its members and to sustain
that responsibility through the
conservation and recovery of our
investment.
Reacquired housing units through The team understands the legal process
foreclosure and/or cancellation of the HDMF had to go through to acquire
contract-to-sell (CTS) undergo legal foreclosed properties. However, the
processes before it can be disposed. undisposed units were already acquired
68
Ownership of a foreclosed unit is and had therefore gone through such

consolidated in favor of HDMF only after process. The only remaining activity for
the expiration of the redemption period. these items is disposition.
And only after ownership consolidation
can HDMF dispose of its acquired assets.
Moreover, all consolidated assets have to
be free from illegal occupants and other
nuisances before it can be offered for
disposal to willing buyers. Hence, all
consolidated assets have to be free from
illegal occupants. The disposal of
acquired property itself required legal
processes that entail time, e.g. public
biddings, publications, negotiations.
The 7,952 reacquired housing units that

remained undisposed as reported were
wedged down in the abovementioned
legal processes. The disposal of these
assets was further stalled starting in
February 2004 with the issuance of
Executive Order No. 281 that directed the
deferment of eviction, foreclosure and
cancellation of housing accounts.
Response by NHA
The general policies for the disposition of The team’s observations were based on
residential units in NHA’s housing the documents provided to the team by
projects are embodied in Memorandum the NHA. It was reflected in the records
Circular No. 1807 dated 9 May 2003 that these units were not awarded.
which defines the intended beneficiaries Likewise, while the team does not
under the various housing programs, the discount the possibility of undocumented
modes of disposition for formal and occupants, NHA’s comments were
informal sector beneficiaries, terms and not supported with schedules or reports
conditions for disposition and sanctions on the housing projects affected by these
for failure to comply with provisions of cases and those with technical and legal
the contract. issues. During the team’s inspection in
some medium rise buildings, the presence
Analysis of the reported 66,380 of unoccupied units were evident.
‘unawarded’ units as of December 2004
based on indicative field data reveal the Nonetheless, the team recognized the
following: efforts being exerted by the NHA and the
innovations introduced to address this
- Almost half (31,500 or 47%) of concern.
‘unawarded’ units are occupied
69
• About one-third (11,326) of these

are undocumented and are subject
to regularization of occupancy;
the rest are lot allocatees.
• 9,123 units (29%) have technical,

legal and other issues prohibiting
disposal. However, processing
for lease arrangements is viewed
as an option for disposition.
- The disposition of some 8,982 units

(13.5%) is dependent on movement of
relocatees to the project sites. The
bulk of these units are in the Southrail
Resettlement Site in Cabuyao, Laguna.
Relocation of families was suspended
due to change in the implementation
plan/schedule of the Southrail
Development Project.
- About 1,004 units (1.5%) are allocated

units for LGU nominees who have yet
to apply for awards
- Disposition of some 2,496

vacant/allocated units (3.7%) is
affected by legal and
technical/physical problems
- 5,027 units (7.6%) are in various

stages of disposition, document
submission, evaluation and approval.
- 6,833 units (10%) are likewise for

disposition; majority through
mortgage takeout where requirements
for accessing mortgage takeout facility
are being prepared.
- 2,884 units (4.3%) are awarded but

excluded in the updated Lot Inventory
report
The primary issue in disposition is on the

documentation of occupied units in
Resettlement and Slum Upgrading areas
70
constituting almost half of the unawarded

inventories. Other project-related
implementation issues such as survey
problems, conflicting claims and other
legal problems need to be addressed.
Accelerating the disposition of vacant
units is likewise another concern to
generate more revenues and minimize
maintenance or security costs.
The difficulty in documenting disposition

of occupied units is attributable to a
significant degree to the resistance or
refusal of a considerable number of unit
occupants to file their application for
award or to complete basic documentary
requirements to effect the award.
In an effort to address this recurring issue,

management has directed to enforcement
of sanctions for noncompliance with
requirements and deadlines for
completion of documents which includes
cancellation of unit allocations and/or
eviction of unit occupants. Guidelines are
also being finalized to provide an
alternative facility through lease or lease
with option to purchase for beneficiaries
who are found financially incapable of
purchasing the units.
Efficiency in the management of

disposition operations as reflected in the
performance of the disposition teams of
the project level is being looked into
together with streamlining of disposition
processes. This will include timeliness
for disposition on a project basis.
Also, as a preventive measure to avoid

delayed documentation of award/sale in
new resettlement projects, Management
has directed documentation of award and
contract signing for resettlement projects
at the place of origin of the beneficiaries
as a precondition for transfer of families
to the resettlement sites instead of the
71
current practice of documentation after

occupancy of the lots/units.
The policy recommendations particularly

on timeliness for disposition, are intended
to be addressed at the operations level
under guidelines to be provided by
management. Monitoring of actions
taken to resolve hindering issues, and
conversion of inventories to sale will be
strengthened.
72
Chapter 5
Reliable Performance Indicator
73
RELIABLE PERFORMANCE INDICATOR
INTRODUCTION
The implementation of a sound monitoring system is dependent on the presence

of clear and well-defined set of procedures on reporting which includes the
development of a set of performance indicators that can be used as yardsticks in
evaluating individual agency accomplishments. Performance indicators are
used to help managers monitor, assess and improve an agency’s performance.
The team noted that the HUDCC could not effectively monitor achievement of
its targets as there were no established criteria to measure performance.
Performance indicators used to report accomplishments vary from year to year
affecting the accuracy of the reported figures and hindering a comparative
analysis of its performance
OBSERVATION
The HUDCC failed to develop performance indicators to accurately measure

overall performance. This resulted in bloated consolidated housing sector
accomplishments as evidenced by double or triple reporting of a single
accomplishment.
Under Executive Order No. 2 dated May 26, 1993 establishing the National
Shelter Programs/Projects Monitoring System (NSPMS), HUDCC shall
develop and identify the National Shelter Programs performance indicators that
can be used as yardsticks in evaluating individual agency accomplishments.
The monitoring system aims to provide a systematic feedback mechanism on
housing provided by the Shelter Agencies to their clients through a
comprehensive set of performance indicators.
Apparently, HUDCC was not able to develop performance indicators. Instead,

it issued guidelines requiring key shelter agencies such as NHA, NHMFC,
HDMF, HLURB and HGC to submit reports. The GFIs (GSIS, SSS, LBP and
DBP), private developers, LGUs and NGOs are not covered by the said
guidelines and do not submit periodic accomplishment reports to HUDCC.
Further evaluation revealed that the guidelines do not include the following:
• the type of performance information required from the shelter agencies,

GFIs, private sector (private commercial banks and housing developers),
LGUs and NGOs;
74
• the performance indicators to be used;

• the method of measurement and consolidation to be applied to ensure
accurate reporting considering the possibility of double-counting; and
• the standard monitoring forms to be accomplished for uniform reporting.
In view of these deficiencies, the shelter and financing agencies and housing
developers were reporting accomplishments using different performance
measures and at time, indicators without any concrete accomplishment. This
then resulted in bloated accomplishments on account of double reporting on
single transaction.
Based on the consolidated reports of all agencies, HUDCC reported that

822,791 units have been delivered for the past three years:
350,000
300,000
311,445
250,000
259,904 251,442
200,000
150,000
100,000
50,000
0
1 2 3
SONA
The key shelter agencies report their accomplishments using the following
indicators:
Annual Source Data

Target/ Program/ Title of Report/
Agency Project No. of Units Indicator No. Remarks
A. 150,000 land tenure for the poor

HUDCC Asset Reform 39,583 Summary of Signed The report merely disclosed
Program Presidential Issuances: that there were Presidential
Issuances that would benefit a
No. of families (beneficiaries) number of homeless families.
• Feb. – Nov.2003 14,430 There were no reports that
• Jan – May 2004 25,153 these units were already
39,583 delivered and received by the
intended recipients.
NHMFC Community 11,453 Monthly Status Report of
Mortgage Program CMP Projects Taken-out
No. of Beneficiaries
• July – Dec. 2003 7,411
• Jan. – Apr. 2004 4,042
11,453
75
Annual Source Data

HUDCC NGC West Project 1,461 NGC Housing Project The land titles prepared
Accomplishment Report - would eventually be reported
West as awarded in the next
• No. of Individual Land reporting period and will
Titles Awarded 1,042 again be counted as another
• No. of Individual Land accomplishment when they
Titles Prepared 419 pertain to the same award.
1,461
NHA North and South 4,836 Project Status of 3rd SONA Even units not yet completed
Rail Relocation Commitments were already considered as
accomplishments.
Actual Housing/Lot Units:
- Northrail • Starts 3,536
Dev’t. • Completion 873
- Southrail • Starts 227

Dev’t. • Completion 200
4,836
Sub-total 57,333
B. 70,000 socialized housing
NHA NHA Projects 15,205 Project Status of 3rd SONA This accomplishment also
------- Commitments reports projects just started.
- Slum 5,684 Actual Housing / Lot Units

Upgrading • Starts 3,987
• Completion 1,697
5,684
- Sites and 4,661 • Starts 2,659

Services • Completion 2,002
4,661
- Land Tenurial 1,501 • Starts 1,050

Assistance • Completion 451
Program 1,501
- Community 1,280 • Starts 360

Land Acq. • Completion 920
Support Prog. 1,280
- Cooperative 59 • Starts 59
Housing
- Resettlement 1,970 • Starts 1,865

• Completion 105
- Emergency 50 1,970
Housing • Completion
Assistance 50
Program
HDMF Socialized 14,278 Approved Housing Loan
Housing Program Applications, Retail/
(P225,000 and Individual Loans (walk-in
below) only)
• No. of Housing
units(socialized) 1,318
76
Annual Source Data

Approved FCL
• No. of Housing units 12,960
(socialized) _____
14,278
HUDCC Mt. Pinatubo 35,370 Accomplishment Report The report already included
Resettlement (April to June 2004) the number of qualified
housing applicants when there
• Not indicated(July ’03 to were no housing units
March ’04) 33,651 awarded yet.
• No. of Qualified Housing
Applicants
1,719
35, 370
Sub-total 64,853
C. 80,000 low-cost housing
HDMF End-user 29,962 Approved Housing Loan The applications in the
Financing Applications, Retail/ pipeline will eventually be
Individual Loans (walk-in reported as approved and
only) again reported under
• No. of Housing units 5,061 approved Institutional Loans
(economic & middle- in the next reporting period.
income)
Approved FCL
• No. of Housing units 24,901
(low-cost)
29,962
Institutional Loans 24,834 Institutional Loan The units reported under

Applications In the Pipeline approved institutional loan
• No. of units 14,239 will be offered to individual
beneficiaries through
Institutional Loan available credit facilities
Applications Approved which will form part of the
• No. of units 10,595 reports of concerned
24,834 financing institutions.
SSS Developmental 342 SONA Accomplishment
Financing & Report of SSS
End-buyers
Financing End-buyers financing:
• Not indicated (July ’03 to 117 These units may have been
March ’04) part of the reported
• Approved housing loan 62 accomplishments of the
applications developers but financed by
• Release payments on 63 the SSS.
approved applications
• Acquired assets 51 Both approved loan
- public bidding __49 applications and payments
- negotiated sale 342 released on approved loan
were considered in the report
when they both refer to the
same unit.
The units acquired were the
same units reported as
approved units.
77
Annual Source Data

GSIS Bahay Ko 3,273 Bahay Ko Program

Program Production Report
• Not indicated (July ‘03 2,441 Most members applying for

– March ’04) housing loans are availing
• Loan Applications 832 housing units from developers
Approved (Apr. & May who are also submitting their
’04) _____ reports on the number of units
3,273 completed.
DBP Developmental 36,205 Project Status Form
Financing & (Project: Provision of shelter
Individual security units to low-salaried
Housing Loans workers & the poor)
Developmental Financing:
• Approved projects: These projects will be offered
July – Dec. ‘03 6,000 to individual beneficiaries and
Jan. – Apr. ‘04 - would again be reported
Individual Housing Loans: under the individual housing
• Approved units: loans.
July – Dec. ‘03 30,000
Jan. – Apr. ‘04 27
36,027
NHA NHA Medium- 1,085 Project Status of Third
Rise Housing SONA Commitments
Projects
Actual Housing Units The project reported started
• Starts 905 will again be reported
• Completion 180 completed in the next
1,085 reporting period.
SHDA Housing Units 30,936 Housing Starts for SHDA These projects reported as
Pledge started will again be reported
completed in the next
• Actual housing starts 30,936 reporting period. Moreover,
as of March 31, 2004 the units reported by
developers will be offered to
Individual beneficiaries who
will avail of SSS, GSIS, or
DBP loans and will again be
reported by the lending
institutions under individual
loans approved.
CREBA Housing Units 2,619 Updates on the Housing
Production and
Accomplishment
• Completed units (July 2,619

1 to Sept. 30, 2003)
Sub-total 129,256
Grand Total 251,442
Despite deficiencies in the individual agency reports and the possibility of

double reporting of accomplishments, HUDCC merely consolidates these
reports to arrive at the total housing units accomplished during the period
78
without considering the following:
• The reality that a client could be dealing with two or more housing agencies and may
therefore be included twice or thrice in the reports. This is evident on the housing units
reported by the developers who are availing institutional loans from HDMF and
offering such units to SSS, GSIS or HDMF members. Some of these units are also
financed by DBP and other funding institutions which are also submitting
accomplishment reports to HUDCC.
• Both developers and HDMF are reporting these projects as shown below:
Accomplishment (No. of Units)

SHDA CREBA HDMF
Name of Under Approved In the
Region Developer Project Location Comp. Comp. Const. Institutional Pipeline
Credit Facility
1 1
NCR Drydock Sta. Rosa Brgy. Labas, 492 400
2
South Corp. Garden Sta. Rosa, 360
Villas Laguna
1
NCR RJ Lhinet Lhinet Tanza, Cavite 200 1,001 2
2
South Dev’t. Corp. Homes 700
Tanza
Medium/High-Rise Building
2 2 2
NCR E. Ganzon EGI Taft 2339 Taft Ave., 509 248 100
North Inc. Tower/EGI Malate, Mla.
Taft Buendia
Direct Developmental Loan
1 1
Minda- Makar Prop. Susan/ Gen. Santos 300 416
2 2 *
nao Dev’t. Inc. Susana City 47 49
Homes II
Pag-ibig City
Luzon Ceres Homes Deca Homes Marilao, 76 1 1,518 2
5,390 2
Group Bulacan
* also included under Credit Facility

1
1st SONA (January 2001 to June 2002)
2
2nd SONA (July 2002 to June 2003)
• Developers may be members of both CREBA and SHDA and therefore submit reports
to both associations as illustrated below:
No. of Units
Pledge Accomplishment
Name of SHDA CREBA
Sector Developer Project Location SHDA CREBA Completed Completed Under Const.
NCR Stateland Windrose Parañaque 44 (1st) 44 (2nd) 9 (1st) 35 (2nd)

South Inc. Townhomes
-do- -do- Crescent Brgy. Burol 269 268 (2nd) 175 (1st) 116 (2nd) 85 (2nd)
Hills Dasmariñas, (1st) 21 (2nd)
Village Cavite
79
No. of Units
Pledge Accomplishment
Name of SHDA CREBA
Sector Developer Project Location SHDA CREBA Completed Completed Under Const.
-do- -do- Sunnycrest Brgy. Burol 171 171 (2nd) 35 (1st) 72 (2nd)
Royal Dasmariñas, (1st)
Cavite
-do- -do- Chester Brgy. Burol 495 495 (2nd) 8 (1st) 8 (2nd)
Place Dasmariñas, (1st)
Cavite
• The validity of the indicators used by the implementing agencies. As discussed above,
projects just started, approved institutional loans and those in the pipeline were already
reported and considered as accomplishment.
On the other hand, housing loans granted by private banks and other financing
institutions were not monitored by HUDCC and thus were not included in the
overall SONA Report.
To establish/determine the extent of their contribution in the housing sector, the

team requested from the banks information on their housing loan program. Of
the 10 banks that were requested information, only one bank responded with the
following data:
Name Loan No. of Loans Granted

of Bank Classification 2001 2002 2003 Total
Equitable PCI P225,000 & below 206 873 146 1,225

Bank P226,000 – P750,000 250 346 413 1,009
Over P750,000 210 427 510 1,147
Total 666 1,646 1,069 3,381
The possibility however, that these loan grantees availed units from developers
reporting accomplishments to HUDCC could not be discounted.
The failure of HUDCC to develop appropriate performance indicators to

measure total consolidated accomplishments of the housing sector renders the
overall accomplishment report inaccurate and unreliable. These reports then
could not be used as a tool in assessing the effectiveness of the housing
program.
Response by HUDCC
The HUDCC in the development of the The team is not questioning the source
80
housing sector accomplishments every of the HUDCC reports but the manner
month has regularly requested by which these reports were
submission of accomplishment reports consolidated. Considering that not all
from GFIs, private developers and to performance indicators used by the
some extent some NGOs like Gawad housing agencies can be considered
Kalinga (when government funds were valid and that single accomplishment is
infused in the projects of GK in 2003- being reported by two or more agencies,
2004). The LGUs housing the sector’s consolidated report then is
accomplishment will be reflected in the bloated.
report of the Pag-IBIG or any housing
agency providing housing support when
they avail of funding from provision of
housing.
Response by HDMF
Internally, HDMF’s established key The team did not question the change of
performance indicators in housing had indicators to conform to existing
been in place since its inception. These conditions. Rather, the use of indicators
indicators are controls that provide without concrete accomplishments yet
information of the organization’s or that would result to double reporting
business concerns and social relevance. such as reporting both individual and
As far as HDMF is concerned, these institutional loans, and approved loans
same indicators are still being used as the and loans in the pipeline when these
basis of evaluating the performance of its may refer to the same subject.
operating units and individual employees
from year to year. However,
performance indicators that measure
HDMF’s fulfillment of its social
mandate, as a government institution, are
determined by HUDCC.
Performance indicators instituted by

HUDCC do change through time to
capture relevant and timely information
on new innovations in housing services.
HDMF, as a government controlled
corporation under HUDCC, abides with
the latter’s valid and realistic
observations and directions.
During the briefings conducted earlier to The team did not question the use of
develop a new monitoring system for the different indicators for different reports
President’s SONA initiated by the depending on the purpose for which the
HUDCC and the PMS, it was made clear report will be used. However, using in
that agency accomplishments will be the same report as indicator of
redefined with focus on housing starts. accomplishment both housing units
81
This was necessary as housing starts started and housing units completed
already spur increase in economic would definitely bloat the reported
activities through housing development. accomplishment as these refer to the
This resulted to the adoption by the Fund same subject
of two separate reports to monitor
housing accomplishments to satisfy
different users depending on the purpose
the report was to be used.
Apart from this, the SONA and the

regular accomplishment reports captured
under the National Shelter Program have
always been covering different reporting
periods of accomplishments, i.e., 2nd
semester of the initial year to 1st semester
of the succeeding year for the SONA,
while full year for the NSP. To date,
these two reports are still being
maintained by the Pag-IBIG Fund.
For the 2nd SONA, we overlooked the

noted double counting of housing
projects under the Institutional .
Financing, i.e., entered as both pipeline
and approved projects. The report on
pipeline projects referred to a previous
month’s accomplishments that needed
updating at the time the 2nd SONA
closing reports were generated.
The institutional loans and approved While there maybe different fund
FCLs belong to two different financing sourcing for these two types of loans,
facilities of Pag-IBIG – Institutional the fact remains that the reported
Financing for Institutional loans and accomplishment under institutional
End-User Financing for approved FCLs. loans are the same units reported under
As such, financial assistance extended to end-user financing for individual loans.
these programs are being recorded This again resulted in bloated
separately. Funding for institutional accomplishment.
loans pertains to the housing production
involvement of Pag-IBIG under the
Institutional Financing that may be used
primarily to produce housing units, such
as development and construction of
housing units. The FCLs, on the other
hand, refer to commitment of Pag-
IBIG’s End-user Financing for
82
individual loans of members who will be

buying completed housing units from
their housing projects. The separate
reporting is in recognition of the two
kinds of financial involvements
contributed b y Pag-IBIG to the housing
sector.
The Funding Commitment The team agrees that once a project is

Line/Agreement (FCL/FCA) falls under started by the developer, it triggers
the scope of housing starts. FCL/FCAs housing development. However,
trigger housing development as reporting activities of both developer
developers are extended guaranteed and the fund members would definitely
funding facilities by Pag-IBIG for their bloat accomplishments as these
housing units that will be completed and activities cover the same project.
bought by Fund members.
The housing accomplishment source

from developer-accounts covered by
FCL/FCAs began in 2003 for the 2nd
SONA, initially capturing the unavailed
portion of the FCL/FCAs only since the
availed portion was already part of the
approved loans under developer-
accounts covered in a separate SONA
report. We never reported the availed
portions of the FCL/FCA at the time
since it was also our intention not to
double count the accomplishment under
the End-User Financing.
For the 3rd SONA covering July 2003 to

June 2004 period, however, the reporting
of approved loans under developer
accounts was totally disregarded and was
replaced by the FCL/FCA report, this
time capturing both the availed and
unavailed FCL/FCA figures. This was
necessary to avoid reporting again newly
approved loans under developer-
accounts from developers with unavailed
FCL/FCA which were part of the
accomplishments under the 2nd SONA
In the case of Institutional Financing, the

reporting of accomplishments under the
2nd SONA was also expanded to include
83
all received institutional loan

applications that were still for approval
with Pag-IBIG. These proposed projects
were considered under housing starts, as
most proposals received by HDMF were
on various stages of development even
prior to loan approval.
84
Chapter 6
Reasonable Land Acquisition and Banking
85
REASONABLE LAND ACQUISITION AND BANKING
INTRODUCTION
Land is a vital resource in the pursuit of the housing production mandate of the
NHA. To ensure the availability of land resource to meet its production target
and its future requirements, the NHA adopts the policy of a sustained Land
Acquisition and Banking (LAB) Program.
Land Acquisition refers to the act of taking possession of land whether public or
private, under various mode of arrangement. For NHA, this shall mean
acquiring the land needed for the current year’s and the next four years’
production targets. Land Banking, on the other hand, refers to the acquisition
of land in advance of actual need to promote planned development and
socialized housing programs at present value. For purposes of NHA, this shall
mean acquiring land inventory for development after five (5) years and
thereafter.
The audit, however, disclosed that the LAB program was not properly managed
resulting in accumulation of 614 hectares of land as of June 2004.
OBSERVATION
The lots acquired by NHA under its Land Acquisition and Banking
Program were not properly managed and monitored resulting in the
accumulation of land inventory through the years. Of the total 10,882
hectares of land acquired as of June 2004, 614 remained idle and
undeveloped of which 287 were acquired during the period 1995 to
2002. There are also 48 hectares with existing tenancy problems and
could not be developed and used for the intended purpose. This
condition defeats the purpose of land acquisition.
One of the strategies adopted by NHA to ensure the timely delivery of the
needed housing units is to resort to land acquisition and banking program. This
strategy was institutionalized on July 15, 1996 through the issuance of
Memorandum Circular No. 1175 providing the guidelines for land acquisition
and banking.
86
As provided therein, land shall be acquired on the basis of the housing needs.
Acquisition of land for future use shall also be allowed based on a sound
projection of the housing needs taking into consideration the following:
• The Land Inventory for Socialized Housing generated by the

LGUs;
• The List of Qualified Beneficiaries, prepared by the LGUs as
mandated under UDHA to serve as basis for establishing the
socialized housing market in each particular area;
• The Housing Need Projections prepared by the Executive Services
Group for purposes of projecting the requirements for land
resources to service the housing need of a particular area.
• The Comprehensive Development Plan for the particular area or
region, if available.
• The operating units shall prepare a Master Plan for Land
Acquisition and Banking Program and Action Plan.
It is then clear from the above provisions that the land acquisition and banking
should be based on the Land Inventory for Socialized Housing, the List of
Qualified Beneficiaries prepared by LGUs and Housing Need Projections.
The need for identifying beneficiaries was reiterated under Memorandum

Circular No. 1297 issued in March 1998 specifying the priority areas for land
acquisition. In the case of land intended for Resettlement Projects in the
National Capital Region, it was specified that the priority areas should be within
50-km radius from Metro Manila or from the place of origin of intended
beneficiaries.
Records, however, showed that apparently, the NHA acquired lots for land
banking without considering the above requirements. Even in the absence of
land inventory for socialized housing generated by the LGUs and the List of
Qualified Beneficiaries, land banking was undertaken. There were likewise no
Master and action plans for LAB program prepared before undertaking land
acquisition activities.
This resulted in the accumulation of land inventory amounting to

P1,239,679,238.47 as reflected in the Investments in Land Assembly for Future
Projects as of December 31, 2003 out of the following funds:
CISFA
55,054,858.68
Main Office
1,184,360,223.09
87
The team could not be provided with the breakdown on the area and status
of the lands covered by this amount. The report of the Estate Management
Department showed that the Landholdings for Future Development is
equivalent to 6,144,725 square meters.
Of this area, 2,874,309 square meters were acquired at a cost of

P848,236,234.75 by the NHA from 1995 to 2003. The status of these lands as
of June 2004 follows:
No. of
Pro- years Intended
Project Posed Date Area Status since Bene-
Location Acquisition Cost Proj. Acq’d. (sq.m.) as of 06/04 acq. ficiaries
Annuling, P 3,750,495.00 SSH 01/95 250,033 Looking for joint 9

Patikul ,Sulu venture partner
GSIS, Brgy, 5,533,278.95 CH 01/95 319,060 Development fund 9
Dahikan to be infused by
Mati, Davao NHA subject to
Or. availability of
funds.
Dolor Estate, 1,603,350.00 - 01/95 9,162 For revalidation 9
Capitol
Hills, Q.C.
Aristocrat, 24,000,000.00 MRH 05/95 4,901 For Joint Venture 9 Formal
Paco, Mla Sector from
Manila
Montevista, 7,360,720.00 SS 08/95 117,262 Contract for 9 Gov’t.
Bambang, Implementation; employees of
N. Vizcaya No funds Nueva
available Vizcaya
Brgy. 13,686,921.00 SS 09-97 105,283 Remaining area to 7 Mt. Pinatubo
Telepayong, be developed upon victims
Arayat disposition of
Pampanga existing inventory.
San Jose, 10,093,209.00 SS 12/97 480,630 With tenancy 7 Mt. Pinatubo
Floridablanca problem victims
Tuy, 88,016,099.50 SS 12/97 679,200 To be part of the 7
Batangas bond to be posted
by NHA re:
garnishment; with
tenancy problem;
covered by CARP
Naic, Cavite 44,776,655.00 Res 06/99 232,610 To be part of the 4 Families
bond to be posted affected by
by NHA the Govt.’s
Flood
Control
Program
88
No. of
Pro- years Intended
Project Posed Date Area Status since Bene-
Location Acquisition Cost Proj. Acq’d. (sq.m.) as of 06/04 acq. ficiaries
Pleasant Hills P 361,527,600.00 MRH 11/99 234,509 Property to be re- 4 Formal

Sub.,Sto. advertised for income
Cristo Del development thru earners
Monte,Bul. joint venture
Pleasant Hills, 117,686,000.00 MRH 06/00 Property to be re- 3 Formal

Sub. Sitio advertised for income
Caretas, development thru earners
joint venture
Brgy. Luray, 32,077,200.00 CH 12/99 114,562 Planning and 4 Government
Toledo Cebu design for phasing & Private
temp. suspended. employees
Despite series of who are
publications no members of
developer has GSIS, SSS
responded etc.
Dream 2,876,775.40 SS 12/00 23,566 Funding for 3 Squatter
Meadows, construction of the families in
Bacolod bridge leading to danger areas
the project is still
being sourced out.
San Isidro, 1,600,000.00 SS 01/01 89,100 no data 2 no data
Koronadal, 917,389.20
So.
Cotabato
CARETA, 104,078,730.78 Comm. 05/01 9,340 Planning & 2
Cebu City design of
identified site for
relocation of
squatters on site
Brgy. 1,999,685.72 SS 10/01 46,590 Bidded on Mar. 2 Informal
Galutan, 16, 2004. Award settlers along
Catarman for board shorelines &
presentation. riverbanks
Tabuc Suba, 4,000,740.00 SS 11/01 10,950 Scouting for 2 Public and
Iloilo City 3,684,875.00 qualified private
developer for Joint school
Venture teachers
Brgy. 10,197,970.00 Dist. 06-02 52,465 For finalization of 2 Local and
McKinley Hsg plans Nat’l. Gov’t.
emp.
Pangasihan 2,393,209.00 - 07/02 20,111 no data 2 no data
Hsg. Project
Poblacion 1,999,831.20 - 07/00 44,769 For updating of 3 Squatter
Proper, N. estimates families
Samar
San Isidro, 4,375,500.00 Res. 12/03 30,206 Plans & Estimates 1 Squatter
Tacloban completed. families
City Awaiting budget
allocation
Total P 848,236,234.75 2,874,309
89
As shown in the tabulation, most of these lands remained idle for 3 to 9 years
without any defined purpose and intended beneficiaries as of June 2004. Even
lands already programmed for development have no defined beneficiaries yet.
There were also 48 hectares acquired with existing tenancy problems and
therefore could not be used until the tenancy issues are resolved.
It may be noted that among the hindrances identified by the NHA for the
development of these land is availability of funds. In view of this reality, the
NHA should not have accumulated substantial quantity of lands and instead
used available funds to develop lands previously acquired. Moreover, these
properties have to be secured entailing additional costs to prevent movement of
illegal occupants.
Inadequate monitoring was also apparent in the case of land located at Dolor
Estate Capitol Hills in Quezon City, where both NHA Main Office and Area
Management Office have no data on its status.
The team also noted that 70% payments for land acquired in Naic, Cavite and
Tuy, Batangas did not comply with the following legal requirements:
• Settlement of claims from tenants and other claimants, if any

• Conversion clearance from the Department of Agrarian Reform
• Zoning Clearance from the Municipality
• Tax clearance
These documents were required to be submitted prior to the release of the

remaining 30% of the purchase price. As the sellers, apparently, could not
submit these documents, such payments remained on hold.
The acquisition of land that could not be developed defeats the very purpose of
land acquisition and banking.
NHA as the government’s sole arm for The team appreciates the actions being
housing production, undertakes land taken by NHA to address this concern.
banking in consonance with its multi-year
plan to accomplish its mandate. However,
components of the multi-year plan are
weighed down by a broad mosaic of
problems from legal (a sudden surge of
adverse claims on properties), tenancy
and funding. It will be recalled that the
1997 Asian financial crisis put a stop to a
booming real estate industry,
unfortunately NHA was also affected.
90
Still, some of the properties covered by

287 hectares stated in the report (corrected
from the figure of 2,874 hectares stated in
the report ) been partially developed or
subjected to bidding/advertisement for
development through contracting or
through joint venture arrangements.
The NHA management has earlier taken

cognizance of the concern on utilization
of NHA’s properties/assets and has
created the Asset Utilization and Project
Evaluation Committee in March 2005
under Office Order No. 6905. the
creation of the Committee is in line with
NHA’s objectives of efficient
management and maximized utilization of
its assets for purposes of its housing
programs and support to the agency’s
objective of sustaining financial viability.
The Committee is tasked to recommend

the appropriate utilization of properties
either through development into housing
projects or through disposition, where
appropriate, as well as to facilitate the
resolution of issues concerning the
properties. The Committee is also tasked
to monitor the implementation of
management of Board decisions regarding
utilization of the properties.
NHA also acknowledges the comments of

the Commission on Audit on observance of
land acquisition requirements/guidelines as
provided for in existing NHA
Memorandum Circulars governing land
acquisition and banking. These guidelines
shall be reviewed for purposes of assessing
their current applicability. The review is
also aimed at streamlining requirements,
processes and procedures to achieve better
efficiency in land acquisition operations.
Except for the Resettlement Program

where acquisition of land is needed and
91
for the Local Housing Program where

projects are to be implemented or located
in congressional districts, land acquisition
and banking activities are presently
downscaled.
92
Part V
Recommendations
93
RECOMMENDATIONS
In order to address the noted observations and improve the implementation of

the housing program, the team recommends the following:
1. Prepare a comprehensive plan and action plan indicating the

strategies to be undertaken to address the housing problem and the
timeframe for its implementation. Identify the participating agencies
and their specific roles, responsibilities and expected contribution to
this program.
2. Coordinate activities of the different implementing agencies to ensure

attainment of commitment and targets. .
3. Consider the capability and plan of the participating agencies in

setting overall target. Require agency commitment to ensure greater
probability of meeting the sector’s overall goal.
4. Restudy the pricing scheme of the NHA. In coordination with

concerned agencies, design housing package affordable to the lowest
30% income earner and possibly with livelihood component to ensure
the success of government housing projects.
5. Assess the cause/s of failure of the implementing agencies to collect

monthly amortization from beneficiaries and take appropriate action.
Enforce the provisions of the contract. Adopt an aggressive collection
campaign/drive to remind defaulting beneficiaries-awardees of their
obligations. Determine the mechanism for collection for every project
implemented. Consider the possibility of assigning collection to a
single agency or tapping the services of the Local Government Units.
6. Formulate policies for the outright disposition of available units. The

policy should define, among others, the following:
• the time frame for disposition of available units to the

intended beneficiaries;
• the intended beneficiaries;
• actions to be taken in case the intended beneficiaries did not
avail of the services being offered;
• alternative actions to be taken in case existing strategies did
not succeed in disposing targeted units within predetermined
deadline;
• the Office responsible for disposing all units and analyzing
the deficiencies in existing policies, and
• reports to be rendered and the information needed to be
reported.
94
RECOMMENDATIONS
7. Develop standard units of measurements that will be used by the

different shelter agencies- government and private alike – in
measuring their performance to ensure uniform and accurate data
and facilitate consolidation of accomplishments. The performance
indicators to be used in consolidating accomplishments should
ensure that duplication of reporting is totally eliminated.
8. Conduct evaluation on the feasibility of existing land inventory for

any NHA programs. Make use of undeveloped and idle lands before
acquiring additional land considering that properties are located
nationwide. Refrain from acquiring land with occupancy/tenancy
problems. Ensure that lots/land purchased are covered by a clean title
before any payment is made.
95
Submitted in compliance with MS & TS Office Order No. 2004-023
dated June 10, 2004.

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Management Services

Report No. 2004-02

Housing and Urban Development

VICE-PRES. NOLI L. DE CASTRO

We are pleased to transmit the overall report on the sectoral

• Housing and Urban Development Coordinating Council

The audit was conducted from July 7, 2004 to February 8, 2005 by a

The team assessed the effective implementation of the housing program

• Sound Shelter Planning and Coordination;

We look forward to the proper implementation of the recommendations

Very truly yours,

By Authority of the Chairman:

Part I Executive Summary 1

Part II The Government’s Housing Program 6

Part III The HUDCC 18

Part IV Audit Observations 32

Chapter 1 Sound Shelter Planning and Coordination 33

Chapter 2 Affordable Housing Units 40

Chapter 3 Efficient Collection of Loan Amortization 50

Chapter 4 Well-defined Disposition and Distribution

Chapter 5 Reliable Performance Indicator 73

Chapter 6 Reasonable Land Acquisition and Banking 84

The government’s housing program was aimed at expanding shelter security to

¾ 150,000 units for security of land tenure to urban poor families;

While the implementation of the government’s housing program is continuous,

¾ Planning and Coordination

AUDIT SCOPE AND METHODOLOGY

¾ National Housing Authority (NHA)

¾ Sound Shelter Planning and Coordination;

¾ Reviewed existing policies and guidelines on the determination of the

The government’s housing program could not be considered effectively

Not all completed units were distributed/awarded or disposed of. An

Inadequate planning were evident on the following cases:

• In five NHA projects, only 2% to 60% of the total number of affected

• Of the total 10,882 hectares of land acquired by the NHA as of June

2003. Included in this inventory are 48 hectares of land with existing

In addition, the implementing agencies’ ability to sustain continuous

MANAGEMENT’S REACTION TO AUDIT OBSERVATIONS

The Government’s Housing Program

The housing situation in the country is characterized by substantial housing

homeless families housing for

double families projected new

The accumulation of demand for housing may be attributed to the following

• High population growth rate;

Term of Estimated Shelter Security

1987-1992 2.70 M 268,249

• 150,000 units for security of land tenure to urban poor families;

This target was intended to be achieved by a collective efforts of the following

A. 150,000 land tenure for HUDCC

Security of tenure refers to the degree of protection afforded to qualified

STRATEGIES AND REFORMS

As discussed in the Medium Term Development Plan, the government intends

the government follow:

Making the housing market more efficient

HDMF Reduced processing time to as short as 7 working days Circular No.

Provided financial assistance to organized groups of formally Circular No.

The National Statistics Office (NSO), as a result of a census on population and

¾ Average household size down to five persons

• While the highest registered household population is 6.13 persons

No. of Household Average

NCR 2,132,989 9,880,102 4.63

¾ Five out of ten households owned/amortized their housing units

Rented Owned/Being amortized

¾ Nine out of ten were single houses