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Socialized Housing in The Philippines Is
Socialized Housing in The Philippines Is
A closer look
at R.A . 7279,
its provisions,
its IRRs and
the myriad
issues on
Section 1 8;
CLARIFYING THE DEVELOPERS ROLE
1 . CLARIFYING THE ROLE OF THE PRIVATE
SECTOR IN THE URBAN DEVELOPMENT AND THE
HOUSING PROGRAM: PRIVATE
SECTORS
I n R A 7 27 9 , S e c . 2 , t h e D e c l a r a t io n o f S t a te Po l i c y a n d ROLE
P r o g r am O b j e c t iv e s c l e a r l y s t a te s I t s h a l l b e t h e
p o l i c y o f t h e S t a te to u n d e r t a ke , i n c o o p e r a t io n w i t h t h e
It is not the
p r i va te s e c to r, a c o m p r e h e n s i v e U r b a n D ev e l o p me n t a n d private sector
Housing Program, XXX that is mandated
with the
responsibility to
provide
A s f a r a s t h i s A c t i s c o n c e r n e d , t h e p r i v a te s e c to r i s t h e socialized
s e c o n d a r y a n d s u b s i d i ar y p l aye r i n t h i s f i e l d . N a t u r a l housing;
l aw a n d t h e i n h e r e n t r e s p o n s i b il i t y o f t h e N a t i o n a l
We also put
G o v e r nm e n t d i c t a tes t h a t i t i s t h e S t a te t h a t m u s t c a r e forward the
f o r a n d p r o v i d e d e c e n t h o u s i n g ( a n d / o r t h e m e a n s to position that
cooperation
a t t a i n i t ) to t h e u n d e r p r i v i l e g e d m a s s e s ; should not give
rise to a liability
on the part of the
private sector to
produce
socialized
housing;
T h e r o l e o f t h e p r i va te s e c to r i s c o o p e r a t io n - - - i n t h a t
t h e l aw s i m ply r e c o g n i z e s t h a t i t i s t h e p r i va te s e c to r RA 7279 does not
t h a t c a n d e l iv e r a p o r t io n o f t h e s h e l te r n e e d s w i t h use the word
b et te r e f f ic i e n c y. compliance
anywhere in the
letter of the law.
It stresses
cooperation;
THE HOUSING BACKLOG
Statistical Report
undertaken by the
Statistical Research &
Training Center
2. HAS GOVERNMENT LOST SIGHT OF THE PRIMARY
OBJECTIVE? WHAT IS
REALLY
NEEDED TO
The ultimate objective that gave impetus to the creation of R.A. 7279 INCREASE
over 20-odd years ago was, and still is, the housing backlog.
HOUSING
DELIVERY?
This mammoth figure, at 3.9 million units, has never decreased.
Every year population growth and home depreciation combine to 1. Liberalize
increase this backlog, which, some sources say, has actually d ev e l o p me n t
ballooned to over 5 million units. financing
programs;
2 . I n te r e s t c o s t
s u b s i d ie s f o r
both
Uplift the conditions of the underprivileged d ev e l o p e r s
and the homeless in urban areas, and end-
by addressing this lack of housing, users;
providing decent homes at 3 . Re d u c t io n o f
affordable cost, providing taxes and
tariffs on
basic services, and providing
basic
employment opportunities. m a te r i al s ;
-- Sec. 2 (a), RA 7279
4 . I m p l em e n t /
p r o v i de I R R s
THIS IS THE OBJECTIVE. for Sections
2 0 a n d 21 ;
UNDUE TAXATION?
ONLY FOR SUBDIVISION DEVELOPERS ?
T h e I R R s a n d t h e i n c r e a s i ng l y p u n i t i ve s t a n c e b e i n g C a n t h ey n o t , s ay,
t a ke n by h o u s i n g r e g ul a to r s a r e n o w t a k i n g i t s to l l o n impose a
t h e s u b d i v i s i o n d ev e l o p e r s , r e s u l t i n g i n r e d u c ed percentage of a
p r o d uc t i o n o f h o u s i n g i n t h e h i g h e r - p r i ce d s t r a t a o f t h e canned sardine
h o u s i n g n e e d s py r a m id ; manufacturers
s a l e s to b e
d e v o te d to
L i m i te d c o r p o r a te r e s o urc e s a n d t h e d i f fi c ult y o f s o c i a l iz e d
a c c e s s i n g d ev e l o p m e n t f u n d i n g f o r s o c i a l i z e d h o u s i n g housing?
p r o j e c t s f u r t h e r c o n s t r i c t s t h e a b i l it y o f d ev e l o p e r s to
deliver; U n d u e Ta x a t i o n ?
T h e o r et ic a l l y, i f a l l t h e s e s u b d i v is io n d ev e l o p e r s t h e n U n c o n s t it u t i o n a l ?
s h i f t t o d o c um e n t in g t h e i r s u b d i v i s io n s a s c o n d o m i n ium s P r e j u d i ci a l ?
( i . e . , C C T i n s te a d o f T C T ) , t h e n t h e r e w i l l b e n o d e l i ve r y These questions
o f s o c ia l i z e d h o u s i n g ; persist.
NON-COMPLIANCE OF
SOCIALIZED HOUSING COMPONENT
Socialized housing
The punitive measure currently employed by housing regulators is the d e v e l o p me n t i s
cancellation of the Licenses to Sell of the main subdivision projects of the fraught with
developer, followed by a Cease-and-Desist Order (CDO) that virtually stops the problems.
developers operations. A f f o r d a b il i t y i s a
major issue.
Suburban
p r o p e r t ie s a r e
To a developer, this is tantamount to DISASTER. LGUs will then prohibit the going up higher in
developer from filing new Development Permits, and will suspend existing price as time
ones, halting all development and selling efforts, completely disabling the passes. Socialized
ability to generate cash flow from sales. Banks, ever watchful in this regard, housing has shown
will likewise refrain from further funding the projects. Buyers will turn away, h i g h r a te s o f
and those that already bought will back out and seek reimbursement. default and
f o r ec l o s u r e .
Direct subsidies
Bankruptcy is the ultimate result.
are needed.
N OT p u n i t iv e
measures.
SUBDIVISION DEVELOPERS GENERATE HUGE
ECONOMIC ACTIVIT Y
I s i t , t h e n , f u n da m e n t a l ly r i g h t f o r g o ve r n m e n t to c a u s e t h e O n a n i m m e d ia te
b a n k r up t c y o f a s u b d i v i s i o n d ev e lo p e r u s i n g c o m p l i a nc e basis, housing
as a reason? r e g u l a to r s s h o u l d
a l l ow f o r a
m o r a to r i u m u n t i l
these issues are
addressed;
SEC 20 (D) OF RA 7279
INCENTIVES
incentive
insen(t)iv/
noun
a thing that motivates or encourages one to do something.
"there is no incentive for customers to conserve water"
synonyms: inducement, motivation, motive, reason, stimulus, stimulant, spur, impetus,
encouragement, impulse;
antonyms: deterrent
a payment or concession to stimulate greater output or investment.
"tax incentives for investing in depressed areas"
EXEMPTION FROM:
1. PROJECT RELATED INCOME TAXES
2. CAPITAL GAINS TAX
3. VALUE-ADDED TAX
4. TRANSFER TAXES
5. DONORS TAXES
In the
i n te r p r et a t io n o f
l aw s , o u r
i m p l em e n t i n g
a g e n c i e s h av e
t h e l e ew ay to
either be
p r o g r e s si v e o r
r e s t r i c t i ve . I n
most cases, the
a t t i t ud e i s to b e
r e s t r i c t i ve , i f o n l y
because it is
m o r e p r u d e n t to
err on the side of
caution. However, reality and the natural order dictates:
THE MORE RESTRICTIVE AND PUNITIVE A LAW OR
REGULATION IS, THE HIGHER THE POTENTIAL FOR GRAFT AND
CORRUPTION.
Potentials for graf t and corruption
R . A . 7 27 9 i s a l a u d a b l e p i e c e o f l e g i s l a t i v e w o r k i n i t s
c o n c e p t a n d i n te n t i o n s . U p l i f t in g t h e p l i g h t o f t h e LET US ALL
underprivileged is a noble ideal . It is in the GO BACK TO
i m p l e m e n t a t i o n t h a t i t f a l te r s .
COOPERATION
W h e n ev e r, a n d w h e r ev e r, t h e l aw b e c o m e s p u n i t i ve , a n d
t h e i m p le m e n t a t i o n o f a l aw g e n e r a te s p r o h i b i t io n s a n d L e t g ov e r n m e n t
contribute its
p r o c e s s e s t h a t t r a n s l a te i n to r e d t a p e , t h i s s c e n a r i o t h e n
share in the
b e c o m e s a f e r t i l e b r e e d i n g g r o u n d f o r p o te n t i a l g r a f t cooperative
a n d c o r r up t i o n . effort;
I n s u c h s i t ua t i o n s , t h e d e g r e e o f d i f fi cul t y a l s o s et s t h e Let non-
a m o u n t o f t h e l a r g e s s e t h a t m ay b e d e m a n d e d . I n t h e compliance or
c a s e o f R A 7 27 9 , t h e m a n n e r o f i t s i m p l em e n t a t i o n i s lack of
p r o v i n g to b e a b a n e to m o s t , i f n o t a l l , s u b d i v i s i o n compliance be
d ev e l o p e r s . p e n a l i z e d by
way o f
monetized
H e r e w e h av e a p o te n t i al to o l f o r t h e u n s c r up ulo us to u s e penalties rather
to c o e r c e , a n d p o s s i b l y ex to r t , l a r g e s u m s f r o m p r i v a te than punitive
s e c to r d ev e l o p e r s . A l l i n t h e n a m e o f c o m p l ia n c e . Cease-and-
Desist Orders;
L e t l aw m a ke r s
ponder and
solve the
C o o p e r a t i o n , w h i c h i s a c t u a l l y w r i t te n i n to t h e l e t te r o f question of
t h e l aw, i s b e i n g c o nve n i e n t l y f o r g o t te n . general
applicability of
t h e U H DA ;
BOARD RESOLUTION No. 890, Series of 2012
THE IRRS
890- January 1, 2013
Revised Implementing Rules & Regulations to Govern Sec 18 of UDHA
GOVERNING
Memo Circular Nos. 01-07, Series of 2013 SEC 18 OF
MCs Implementing Guidelines and Procedures for Board Reso No. 890, Series of
2013
January 2, 2013
RA 7279
MC No. 01, Series of 2013 Balanced Housing
Development
This will
MC01 Concerns Developers complying with Sec 18 by
developing the compliance project by itself present an
MC No. 02, Series of 2013
organized
Development of New Settlements l i s t in g , i n
MC02 Developers complying with Section 18 By going into joint-
ventures with its accredited subsidiaries or other accredited c h r o n o lo g i ca l
developers of socialized housing projects, or by contributing to
accredited NGOs new socialized housing projects o r d e r, o f t h e
M.C. No. 03, s. of 2013
v a r i o us M e m o
C i r c ul a r s
MC03
Slum Upgrading
Developers complying with Section 18 by contributing
to NHAs programs and projects, or by
i s s u e d by t h e
purchasing NHAs instruments of participation H LU R B to
MC No. O4, s. 2013 i m p l em e n t S e c
Joint-Ventures with LGUs and Housing Agencies
18, Balanced
MC04 Developers complying with Section 18 By going into joint-ventures with the
LGUs or HAs for the development of socialized housing projects or provision
of facilities, centers or amenities Housing
D ev e l o p m e n t ,
MC No. 05, s. 2013
Participation in
o r s o c i al i z e d
MC05 Community Mortgage Program
Developers complying with Section 18 through contribution and
c o m p l ia n c e .
participation in the CMP, including purchase of asset-backed securities
--- Article published in the Manila Times, (authored by Atty Ryan Tan of OSHDP)
FINDING A BETTER POLICY: BALANCED AFT E R M ORE
THAN 20 YEARS
DEVELOPMENT HOUSING REQUIREMENT VS. OF
MARKET/ECONOMIC FORCES I M P L E M E NT I N G
T H E U H D P,
If housing is essentially an economic function where the fundamentals of supply THE HOUSING
and demand is to be observed, private developers will be willing to supply B AC K LO G N OW
socialized housing units if there is an effective demand. As a matter of fact, S TA N D S AT A
M AS S I V E N UM B E R
there may be no need for balanced housing development requirement if we O F OV E R 5 . 0
follow this principle. Policy must simply be realigned to let the market forces MILLION UNITS,
work. A F F E C T I N G C LO S E
TO 2 0 % O F T H E
Housing needs do not necessarily translate to effective demand because of the TOTA L
issue of affordability. Government must elevate those underprivileged and P O P U L AT I O N .
homeless members of our society to a level where they can actually afford the
minimum design standard housing unit. Then, their housing needs will become TO S OLV E T H I S ,
effective demand; and effective demand will drive up housing supply. T H E G OV E R N MEN T
MUST CHANGE ITS
This is where subsidy comes in to influence the behavior of the S TA N C E F RO M
underprivileged and homeless and give them access to housing stock. P U N I T I V E TO
It is our position that the state must step up its direct subsidy program, because C O O P E R AT I VE .
indirect subsidies are clearly not enough.
IT MUST REALIZE
What is concerning us in the private sector is the seeming governmental attitude T H AT T H E
of passing on its obligation to provide housing for the poor by compelling P R I VAT E
developers to produce socialized housing, even if it is not in line with their D E V E LO PM EN T
business. This is the impetus for Sec. 18, RA 7279. S E C TO R S RO L E
IS
--- Article published in the Manila Times, (authored by Atty Ryan Tan of OSHDP)
P I VOTA L .
RECOMMENDATIONS:
1
An in-depth review of HLURB
Government has the primary Board Resolution No. 890 and
responsibility of providing its resulting Memo Circulars
housing to the should be undertaken by the
underprivileged. Committee on Housing and all
Cooperation should not give concerned agencies with the
rise to a liability on the part of objective of revising the IRRs of
the private sector to produce RA 7279 to properly
socialized housing; implement cooperation;
2
Heads of housing agencies
Solving the housing backlog of must again be reminded by
over 5 million units is the the Office of the President and
governments primary Congress of the primary task
objective; of addressing the backlog;
RECOMMENDATIONS:
3
Justice delayed is justice denied. The Committee on Housing
After 21 years, lawmakers must be should hold a series of
given a wake-up call to properly public hearings that will
amend RA 7279 & eliminate the identify the inequities and
inequities therein, that serve to other items requiring
prejudice and penalize only a amendment of RA 7279.
specific sub-sector of the housing The current bill being
industry; discussed must take all the
issues into account;
4 Extremely punitive
There is a need to urgently redefine
the penalties imposed on non- measures such as
compliance, in order to avert a withholding issuances of
looming financial crisis facing new licenses to sell and
affected major developers in the cease-and-desist orders
residential development sector; should be eliminated in the
penalties for non-
compliance imposed on
A current main project of a developers. Monetized
developer should not be stopped in penalties should instead be
mid-stream due to lack of adopted, bearing in mind
compliance, immediately impairing that the punitive measures
his main business operation, and may result in serious
further impeding his efforts to fund damage to the developers
the compliance projects; business.
RECOMMENDATIONS:
5
Restrictive and punitive measures The fact that private residential
currently being implemented are developers generate a huge
taking too large a toll. There is a amount of economic activity is
need to assess the overall cost to being discounted. Government
the economy and to government has to compute the cost-benefit
revenues if subdivision developers ratio of the results of punitive
go out of business as a result of action versus the loss of tax
these measures; revenues from this sector.
6 As embodied in Sec 20 of RA
7279, the Housing Agencies
The concerned agencies must and the Department of Finance
liberalize the access to incentives should immediately finalize the
provided for in Sec 20, by creating IRR for Sec 20 (Incentives), and
and issuing an IRR that simplifies provide for penalties to
the grant process; government officials and
personnel who impede or
refuse implementation;
RECOMMENDATIONS:
7 The IRR for Sec 21 should
Governments cooperative role is immediately be created and
embodied in Sec 21, in which the issued, directing the LGUs or the
LGU or the NHA is tasked to provide NHA to deliver the facilities and
basic facilities & services. An IRR utilities required under RA
is needed, as well as provisions for 7279. Non-delivery by these
enforcement; agencies will absolve the private
developers of non-compliance,
and provisions for penalties
should be included against LGU
& NHA officials who violate this
proviso;
8
MORATORIUM:
It is but fair for the Government to
provide the incentives (Sec 20) and Until the IRR for Sec 21 is
the basic utilities/services (Sec 21) promulgated, the HLURB
to all ongoing socialized housing should allow a moratorium on
projects before it can have the the issuances of suspension,
moral and legal ascendancy to cancellation, and/or cease-and-
impose penalties for non- desist orders of licenses to sell
compliance; affecting main development
projects;
RECOMMENDATIONS:
9 We recommend the removal of the
accreditation process for socialized
The proper safekeeping and
housing developers. This
extrapolation of the records on
unnecessarily increases HLURBs
the Cert of Registration &
workload, and is redundant,
License to Sell will suffice to
considering that the Board already
enable HLURBs regulatory role.
has registration and regulatory control
of the projects and the developers, via
It is proposed that the
the CR and the LS. In addition, this is
accreditation process for
a highly restrictive requirement in that
socialized developers be
small developers are denied the
dispensed with.
chance to participate;