REBAP Cebu Comprehensive Review

REAL ESTATE BROKERAGE AND PRACTICE

 Licensing Rules & Regulations (Legal Requirements for Real Estate Service Practice)

 Code of Ethics and Responsibilities  Principles & Practice of Real Estate

1

Legal Requirements for Real Estate Service Practice A. MAJOR LAWS GOVERNING REAL ESTATE SERVICE PRACTICE 1. THE REAL ESTATE SERVICE ACT, REPUBLIC ACT NO. 9646 and IRR 2. SUBDIVISION AND CONDOMINIUM BUYERS PROTECTIVE DECREE, PD 957 3. LOCAL GOVERNMENT CODE OF 1991, REPUBLIC ACT NO. 7160 B. THE REAL ESTATE SERVICE ACT OF THE PHILIPPINES (The following is the summary of the IRR of R. A. 9646)

REAL ESTATE SERVICE ACT OF THE PHILIPPINES R. A. No. 9646 Real Estate Service Act of the Philippines • •

Effectivity of the law Resolution No. 02 of the Professional Regulatory Board of Real Estate Service (PRBRES) – Implementing Rules and Regulations of R.A. No. 9646 Coverage of the Implementing Rules and Regulations

Rule I -Title of the Rules, Declaration of Policy & Definition of Terms Rule II -Professional Regulatory Board of Real Estate Service Rule III -Licensure Examination & Registration Rule IV- Practice of Real Estate Service Rule V – Penal and Final Provisions

(Sections 1 to 3) (Sections 4 to 11) (Sections 12 to 24) (Sections 25 to 38) (Sections 39 to 45)

Rule I Title of the Rules, Declaration of Policy & Definition of Terms Section 1 - Title Section 2 - Declaration of Policy Section 3 - Definition of Terms a. Appraiser/valuer b. Assessor c. Real Estate d. Real Estate Development Project Section 3 – Definition of Terms e. Real Estate Developer f. Real Property g. Real Estate Service Practitioners 1. Real Estate Consultant 2. Real Estate Appraiser 3. Real Estate Assessor 4. Real Estate Broker 5. Real Estate Salesperson h. Accredited and Integrated Professional Organization (AIPO) i . Interim Accredited Professional Organization (IAPO) Rule II Professional Regulatory Board of Real Estate Service Section 4 – Creation and composition of the Board • Under the supervision and administrative control of the PRC • Composed of a Chairman and 4 members all appointed by the President from the 3 recommendees chosen by PRC from a list of 5 nominees per position submitted by the AIPO, Provided 2 of the members of the Board shall represent the Government Assessors and Appraisers who are both in active service. Section 5 – Powers and Functions of the Board a) Provide comprehensive guidelines for the promotion and development of the real estate industry in relation to the regulation of the practice of the real estate service profession; b) Conduct licensure examinations for the practice of the real estate service profession and prescribe the appropriate, syllabi of the subjects for examination with their tables of specifications; 2

c) Issue, suspend, revoke or reinstate, after due notice and hearing, certificates of registration or professional identification cards for the practice of RES; d) Maintain a comprehensive and updated register of licensed RES professionals; e) Monitor the conditions affecting the practice of RES and adopt such measures as may be proper for the enhancement of the profession and/or the maintenance of high professional, ethical and technical standards; f) Adopt a National Code of Ethics and Responsibilities issued by the AIPO to be strictly observed by all licensed RES practitioners; g) Hear or investigate any violation of R.A. 9646, the IRR and the Code of Ethics and Responsibilities for RES practitioners and issue subpoena duces tecum to secure the appearance of witnesses and the production of documents in connection therewith; h) Safeguard and protect legitimate and licensed RES practitioners and, in coordination with the AIPO of RES practitioners, monitor all forms of advertisements, announcements, signboards, pamphlets, brochures and others of similar nature concerning real estate and, where necessary, exercise its quasi-judicial and administrative powers to finally and completely eradicate the pernicious practices of unlicensed or unauthorized individuals; i) Prescribe, in cooperation with CHED or the concerned state university or college, the essential requirements as to the curricula and facilities of schools, colleges or universities seeking permission to open academic courses or already offering such courses in RES, and to see to it that these requirements, including the employment of qualified faculty members, are properly complied with; j) Promulgate, administer and enforce rules and regulations necessary in carrying out the provisions of R.A. No. 9646; k) Supervise and regulate the registration, licensure and practice of RES in the Philippines; l) Assess and fix the rate of reasonable regulatory fees; m)Administer oaths and affirmations; n) Adopt an official seal of the Board with the interpretation of its symbols attached to this resolution and made an integral part thereof as annex “A”; o) Evaluate periodically the status of RES education and profession, and recommend and/or adopt measures to upgrade and maintain its high standard; p) Prescribe guidelines and criteria for the CPE program for RES practitioners in consultation with the AIPO of RES practitioners; q) Screen, issue and monitor permits to organizations of RES professionals in the conduct of seminars and accredit such seminars pursuant to the CPE program, as well as the instructors or lecturers therein, for the purpose of upgrading the quality and knowledge of the profession; r) Monitor and supervise the activities of the AIPO and other associations of RES practitioners; and s) Discharge such other powers, duties and functions as the PRC may deem necessary to carry out the provisions of R.A. No. 9646. The policies, resolutions and rules and regulations issued or promulgated by the BOARD shall be subject to review and approval by the PRC. However, the Board’s decisions, resolutions or orders which are not interlocutory, rendered in an administrative case shall be subject to review by the PRC only on appeal, in accordance with R.A. No. 8981 and its IRR. Section 6 – Qualifications of the Chairperson and members of the Board (at the time of appointment) a) Citizen and resident of the Philippines; b) Holder of a bachelor’s degree related to Real Estate; c) An active licensed practitioner of RES for at least 10 years prior to his/her appointment; d) A bona fide member in good standing of the AIPO of RES practitioners but not an officer or trustee at the time of his/her appointment; e) Neither be a member of the faculty of an institute, school, college or university, nor have any pecuniary interest, direct or indirect, in any institution or association where review classes or lectures in preparation for the licensure examination are being offered; and f) Of good moral character, and must not have been convicted by final judgment by a competent court of a criminal offense involving moral turpitude. Section 7 - Term of Office • 3 years and may be reappointed for a second term but not to exceed a total of 6 years (continuous) • The members of the first Board shall hold office for the following terms Chairperson - 3 years 2 members - 2 years 2 members - 1 year Section 8 - Compensation and allowances of the Chairperson and members of the Board. The chairperson and the members of the Board shall receive compensation and allowances comparable to the compensation and 3

allowances received by the chairman and the members of existing professional regulatory boards under the Commission, as provided for in the General Appropriations Act, the Salary Standardization Law, and the Joint Circular issued by the Commission and the Department of Budget and Management (DBM). Section 9 - Removal of the Chairperson and members of the Board. - maybe removed or suspended by the President upon the recommendation of the PRC after due notice and hearing in a proper administrative investigation to be conducted by PRC on the following grounds: 1. Neglect of duty 2. Abuse of power 3. Oppression 4. Incompetence 5. unprofessional, unethical conduct 6. Immoral or dishonorable conduct; 7. Commission or toleration of irregularities in the conduct of examination or tampering of the grades, or 8. for any final judgment or conviction of any criminal offense involving moral turpitude. The PRC, in the conduct of the investigation shall be guided by Sec. 7 (s) of R.A. no. 8981 and its rules on administrative investigation. Section 10 – Supervision of the Board, custodian of its records, Secretariat and Support Services. Section 11 - Annual Report Rule III Licensure Examination and Registration Section 12 – Licensure Examination – Every applicant seeking to be registered and licensed as a RES practitioner, except a Real Estate Salesperson, shall undergo an examination to be given by the Board. Section 13 - Scope of Examination a) For Real Estate Consultants: 1. Fundamentals of real estate consulting; 2. Standards of Ethics; 3. consulting tools and techniques, which include project feasibility study and investment measurement tools; 4. Real estate finance and economics; 5. Real estate consulting and investment analyses; 6. Consulting for specific engagement, which includes consulting for commercial, industrial, recreation and resort and hotel properties, and consulting for government and corporate and financial institutions; 7. land management system and real property laws; and 8. any other related subjects as may be determined by the Board. b). Real For Estate Appraisers 1. Fundamentals of real estate principles and practices 2. Standards of Ethics 3. Theories and principles in appraisal 4. Human and physical geography 5. Methodology of appraisal approaches 6. Valuation procedures and research 7. Appraisal of machinery and equipment 8. Practical appraisal mathematics 9. Appraisal report writing 10. Real estate finance and economics 11. Case studies 12. Land management system and real property laws 13. Any other related subjects as may be determined by the Board C) For Real Estate Brokers 1. Fundamentals of property ownership 2. Code of Ethics and responsibilities 3. Legal requirements for real estate service practice 4. Real estate brokerage practice 5. Subdivision development 6. Condominium concept and other types of real estate holdings 4

7. 8. 9. 10. 11. 12. 13. 14.

Real estate finance and economics Basic principles of ecology Urban and rural land use Planning, development and zoning Legal aspect of sale, mortgage and lease Documentation and registration Real property laws and taxation Any other related subjects as may be determined by the Board.

Section14–Qualifications of applicants for examination (at the time of filing of application) a. A citizen of the Philippines b. A holder of a relevant bachelor’s degree from a state university or college, or other educational institution duly recognized by CHED: Provided, That he/she has completed at least 120 credit units of real estate subjects and training from accredited service providers, as may be determined by the Board; Provided further, that as soon as a course leading to a Bachelor’s degree in RES is implemented by CHED, the Board shall make this course a requirement for taking the licensure examination c. Is of good moral character, and must not have been convicted of any crime involving moral turpitude d. An application for the licensure examination for Real Estate Consultants must show proof that he/she has at least 10 years experience as a licensed real estate broker, or an assessor, or as a bank, or institutional appraiser, or an employed person performing real property valuation, or at least 5 years experience as a licensed real estate appraiser. Section 14 - Requirements 1. Original and photocopy of Birth Certificate or Certificate of Live Birth (NSO) and/or valid Philippine passport, or any other proof of citizenship 2. Original and photocopy of transcript of records and/or diploma with scanned picture 3. Original and photocopy of notarized certification by employer of his/her years of experience or prerequisite Certificate of Registration (COR) and/or Professional identification Card (PIC) or DTI License (for real estate consultants) 4. Original and photocopy of NBI clearance 5. Original and photocopy of duly notarized accredited seminar and/or training certificate 6. Community Tax Certificate 7. Four (4) colored passport size pictures with white background and complete nametag and other documents in accordance with the requirements set by PRC Section 15 - Ratings in the Examination • The candidate must have obtained an average of at least 75% in all subjects • With no rating below 50% in any subject. Section 16 – Release of the results of Examination • Results of the licensure examination shall be released by the Board within 10 days from the last day of the examination. The result shall be published in a daily major newspaper of general circulation and PRC website • Section 17 – Issuance of the Certificate of Registration and professional Identification Card Section 18 – Refusal to register - convicted by a court of competent jurisdiction of any criminal offense involving moral turpitude - has been found guilty of immoral or dishonorable conduct after investigation by the Board - has been found to be psychologically unfit Section 19 – Revocation or suspension of the COR, ID Card or Cancellation of special Temporary Permit (GROUNDS) a) Procurement of a certificate of registration and/or professional ID card, or special temporary permit by fraud or deceit b) Allowing an unqualified person to advertise or to practice the profession by using one’s certificate of registration or professional ID, or temporary permit c) Unprofessional or unethical conduct d) Malpractice or violation of any of the provisions of R.A. no. 9646, the IRR, and the Code of Ethics and responsibilities for RES practitioners 5

e) Engaging in the practice of the profession during the period of one’s suspension  The rules on administrative investigation issued by the PRC shall govern  The suspension or revocation of the COR and ID Card or the cancellation of the temporary/special permit shall not prejudice prosecution for criminal liabilities and the imposition of the penalties under R.A. No. 8981, R.A. No. 9646, Revised Penal Code or any special law Section 20 – Registration without Examination a) Those whose, on the date of effectivity of R.A. No. 9646 or as of July 30, 2009 are already licensed as real estate brokers, real estate apraisers or real estate consultants by the DTI by virtue of Ministry Order No. 39 as amended: Provided, they are in active practice as real estate brokers, real estate appraisers, and real estate consultants, and that they have undertaken relevant CPE or CEP : provided further, that the following practitioners shall be allowed to register: 1. Any holder of a valid DTI license who has earned 15 CEP or CPE credit units 2. Those who had failed to renew their DTI License prior to July 30, 2009 but who have earned 24 CEP credit units from accredited service providers as per M.O. 39 or CPE credit units from CPE Council Accredited Provider from 2007 to July 30, 2011 3. Those who had passed the 2009 & 2008 licensure examinations given by the DTI but who had failed to obtain their license upon the effectivity of the R.A. No. 9646 and who have earned 15 CEP or CPE credit units. 4. Those who had passed the 2007 licensure examinations given by DTI but who had failed to obtain their license upon the effectivity of R.A. 9646 and who have earned 18 CEP or CPE credit units 5. Those who had passed the DTI licensure examination in 2006 and prior years but who had failed to obtain their license upon the effectivity of R.A. No. 9646 and who have earned 120 CEP or CPE credit units. Provided, that real estate practitioners falling under the above-described categories who fail to comply with the necessary CPE requirements within 2 years after the effectivity of R.A. No. 9646, on or before July 30, 2011, shall be required to take the Board licensure examination for RES practitioners. Section 20 – Registration Without Examination b) Assessors and appraisers who, on the date of the effectivity of R.A. No. 9646 or as of July 30, 2009, hold permanent appointment and are performing actual appraisal and assessment functions for the last 5 years, have passed the Real Property Assessing Officer (RPAO) examination conducted and administered by the Civil Service Commission (CSC) in coordination with the DOF and have undertaken relevant CPE to the satisfaction of the Board c) Assessors and appraisers who, on the date of the effectivity of R.A. No. 9646 or as of July 30, 2009, hold permanent appointments and have at least 10 years actual experience in real property appraisal or assessment and have completed at least 120 hours of accredited training on real property appraisal conducted by national or international appraisal organizations or institutions/entities, duly certified by DOF or any other pertinent national government agencies or GOCC as the case may be, recognized by the Board and relevant CPE credit units •

•

Those falling under categories b and c shall register with the Board after they shall have complied with the requirements for registration as real estate appraisers, and have completed 24 hours CPE credit units. Provided, that those seeking to be licensed to a new credential level shall be required to take the pertinent board examination. Those so exempt under the aforementioned categories shall file their application within 2 years from the effectivity of R.A. No. 9646 or until July 30, 2011. Renewal of the ID card is subject to the provision of Section 17, Article III of R.A. No. 9646.

An applicant for registration without examination must submit the following documents: 1. Original and photocopy of Certificate of Live Birth/Birth Certificate (NSO), or valid Philippine passport, or any other proof of citizenship 2. Original and photocopy of Certificate of Registration (COR) and/or Professional Identification Card (PIC) or DTI Licenses 3. DTI Certification of Rating (for those who passed the examination but failed to obtain their license) 4. Original and photocopy of NBI Clearance 5. Duly notarized CEP/CPE Certification 6. Civil Service Commission Certification, DOF, or any other national government agencies, or GOCC certification (assessors or government appraisers0, or any certification of accredited seminar/training provider 7. Appointment papers and service records to prove appraisal or assessment experience (for assessors or government appraisers) 8. Original and photocopy of Marriage certificate/Contract of Marriage (NSO) (if applicable) 6

9. Four (4) passport size colored photos with complete nametag in white background, original and photocopy of community tax certificate (CTC), and surety bond for Real Estate Brokers and private Real Estate Appraisers. Section 21 – Reinstatement, Re-issuance or Replacement of COR, ID card and special permit • The Board may, after 2 years from the date of revocation and upon application and compliance with the required CPE units, and for reasons deemed proper and sufficient, reinstate any revoked COR and reissue a suspended ID card and in so doing, may in its discretion, exempt the applicant from taking another examination; • Provided, the Board shall issue a resolution subject to the approval of PRC in granting a petition for reinstatement to the practice of RES profession. • Lost, destroyed or mutilated COR, ID card or permit may be replaced. Section 22 – Roster of Real Estate Service Practitioner Section 23 - Issuance of special/temporary permit • For real estate service practitioners from other countries whose services are urgently needed in the absence or unavailability of local real estate service practitioners for the purpose of promoting or enhancing the practice of the profession in the Philippines. • Section 24 – Foreign reciprocity Rule IV Practice of Real Estate Service Section 25 – Oath Section 26 – professional Indemnity Insurance/Cash or Surety Bond • All Real Estate Brokers and Private Real Estate Appraisers shall in addition to the oath, be required to post a professional indemnity insurance/cash or surety bond, in the amount to be determined by the Board, which in no case shall be less than P20,000 • Without prejudice to the additional requirements of client. • Renewable every 3 years. Section 27 – Acts constituting the practice of real estate service (section 3 (g)) Section 28 – Exemptions from the acts constituting the practice of Real Estate Service a) Any person, natural or juridical, who shall directly perform by himself/herself the acts mentioned in section 3 of the IRR with reference to his/her or its own property, except real estate developers who are regulated by and registered with the HLURB pursuant to law and other resolutions/regulations such as PD 957 as amended, BP 220 and their IRRs b) Any receiver, trustee or assignee in bankruptcy or insolvency proceedings Section 28 – Exemptions from the acts constituting the practice of Real Estate Service c) Any person acting pursuant to the order of any court of justice d) Any person who is a duly constituted attorney-in-fact for purposes of sale, mortgage, lease or exchange, or other similar contracts of real estate, without requiring any form of compensation or remuneration e) Public Officers in the performance of their official duties and functions, except government assessors and appraisers. Section 29 – Prohibition against unauthorized practice of Real Estate Service Section 30 – Positions in government requiring the service of registered and licensed RES practitioners • Within 3 years from effectivity of R.A. No. 9646, all existing new positions in the national and LGs, whether career, permanent, temporary or contractual, primarily requiring the services of any RES practitioner, shall be filled only by registered and licensed RES practitioners. • All incumbent assessors holding permanent position shall enjoy security of tenure. But they may not be promoted until they meet the requirements prescribed in R.A. 9646. Section 31 – Supervision of real Estate Salespersons • • •

No examination required but shall be accredited with the Board Must have completed at least 2 years of college Must have undergone training and seminars of at least 12 credit units in real estate brokerage

7

•

• •

• • •

•

•

•

Those who are registered with DTI/HLURB or other salespersons who are in the active practice for at least 3 years, as may be certified by a licensed broker or a real estate developer prior to the effectivity of R.A. No. 9646 may also be accredited by the Board until July 30, 2011 In both cases, such real estate salesperson must have undergone at least 120 training hours in real estate brokerage Must have submitted original NSO certificate of live birth/birth certificate, NBI clearance, certificate of educational attainment or its equivalent, notarized certificate of training or seminar and notarized certificate of their supervising licensed brokers as may be required by the Board They are under the direct supervision and accountability of a real estate broker They cannot by themselves be signatories to a written agreement involving a real estate transaction unless the real estate broker who has direct supervision and accountability over them is also a signatory thereto No real estate salesperson, either directly or indirectly, can negotiate, mediate or transact any real estate transaction for and in behalf of a real estate broker without first securing an authorized accreditation as real estate salesperson for the real estate broker, as prescribed by the Board. A real estate broker shall be guilty of violating R. A. No. 9646 or the IRR for employing or utilizing the services of a real estate salesperson when he/she has not secured the required accreditation from the Board prior to such employment. No salesperson shall be entitled to receive or demand a fee, commission or compensation of any kind from any person, other than the duly licensed real estate broker who has direct control and supervision over him, for any service rendered or work done by such salesperson in any real estate transaction. No violation of this provision shall be a cause for revocation or suspension of the certificate of registration of the real estate broker unless there was actual knowledge of such violation or the broker retains the benefits, profits or proceeds of a transaction wrongfully negotiated by the salesperson.

Section 32 – Corporate practice of real estate service • • • • •

• •

•

Must be registered with SEC All persons authorized to act for the partnership or corporation must be duly registered and licensed real estate brokers, appraisers and consultants, as the case may be. The partnership or corporation must regularly submit to the PRC and SEC as part of its annual reportorial requirements a list of its real estate service practitioners There shall be at least 1 licensed real estate broker for every 20 accredited salespersons Divisions or departments of partnerships and corporations engaged in marketing or selling any real estate development project in the regular course of business must be headed by a full-time registered and licensed real estate broker Branch offices of real estate brokers, appraisers or consultants must be manned by a duly licensed real estate broker, appraiser or consultant, as the case may be. In case of resignation or termination from employment of a RES practitioner, the same shall be reported by the employer to the Board within a period not to exceed 15 days from the date of effectivity of resignation or termination. Subject to the provisions of the Labor Code, a corporation or partnership may hire the services of registered and licensed real estate brokers, appraisers or consultants on commission basis to perform real estate services and the latter shall be deemed independent contractors and not employees of such corporations.

Section 33 – Display of license in the place of business Section 34 – Accreditation and integration of Real Estate Service Association Section 35 – Code of Ethics and Responsibilities for Real Estate Service Practitioners Section 36 – Continuing Professional Education (CPE) Program • The Board will promulgate guidelines • The Board shall create a CPE Council composed of a chairperson coming from the Board, a member from the AIPO and a member from the academe Section 37 – Enforcement Assistance to the Board Section 38 – Indication of the Certificate of Registration, Professional ID Card/License Number, Privilege Tax Receipt (PTR) Number, and AIPO Number

8

Rule V Penal and Final Provisions Section 39 – Penal Provision • Penalty for any violation shall be fine of not less than P100,000 or imprisonment of not less than 2 years or both. • If the violation is committed by unlicensed practitioner, the penalties shall be double • In the case of partnerships or corporations, the partners, officers, president, director or manager may be liable who committed, or consented or knowingly tolerated the violation. Section 40 - Appropriations Section 41 – Transitory provisions Section 42 - Implementing Rules and Regulations Section 43 – Separability Clause Section 44 - Repealing clause Section 45 - Effectivity (Full Text of IRR R. A. 9646) REPUBLIC ACT NO.9646 IMPLEMENTING RULES AND REGULATIONS REPUBLIC OF THE PHILIPPINES PROFESSIONAL REGULATION COMMISSION Manila PROFESSIONAL REGULATORY BOARD OF REAL ESTATE SERVICE Resolution No. 02 Series of 2010 IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO.9646, KNOWN AS THE "REAL ESTATE SERVICE ACT OF THE PHILIPPINES" Pursuant to Section 5, (J), Article II and Section 42, Article V of Republic Act No.9646, "An Act regulating the Practice of Real Estate Service in the Philippines, Creating for the Purpose a Professional Regulatory Board of Real Estate Service, Appropriating Funds therefore, and for other Purposes", the Professional Regulation Commission, herein after referred to as the Commission, hereby adopts, issues and promulgates this resolution embodying the following Implementing rules and Regulations to carry out, administer, and enforce the provisions of R.A. NO.9646. RULE 1 TITLE OF THE RULES, DECLARATION OF POLICY & DEFINITION OF TERMS SEECTION 1.Title- These Rules shall be known as "THE IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO.9646, known as the Real Estate Service Act of the Philippines", in short, the "IRR of R.A. No.9646", or merely the IRR. SEC.2. Declaration of Policy- The State recognizes the vital role of Real Estate service practitioners in the social, political economic development and progress of the country by promoting the real estate market, stimulating economic activity and enhancing government income from real property-based transactions. Hence, it shall develop and nurture through proper and effective regulation and supervision a corps of technically competent, responsible and respected professional real estate service practitioners whose standards of practice and service shall be globally competitive and will promote the growth of the real estate industry. The IRR shall be interpreted, construed, and carried out in the light of the above Declaration of Policy, which embodies the legislative intent in enacting R.A. NO. 9646. SEC.3. Definition of terms - As used in the IRR, the following terms shall be understood to mean as follows: a. "Appraiser" also known as values, refers to a person who conducts, valuation/appraisal; specifically, one who possesses the necessary qualifications, license, ability and experience to execute or direct the valuation/appraisal of real property. b. "Assessor" refers to an official in the local government unit, who performs appraisal and assessment of real properties, including plants, equipment, and machineries, essentially for taxation purposes. This definition also includes assistant assessors. c. "Real Estate" refers to the land and all those items which are attached to the land. It is the physical 9

d. "Real Estate development project" means the development of land for residential, commercial, industrial, agricultural, institutional or recreational purposes, or any combination of such including, but not limited to tourist resorts, reclamation projects, building or housing projects, whether for individual or condominium ownership, memorial parks and others of similar nature. e. "Real estate developer" refers to any natural or juridical person engaged in the business of developing real estate development project for his/her or its own account and offering them for sale or lease. f. "Real property" includes all the rights, interest and benefits related to the ownership of real estate. g. "Real estate service practitioners" shall refer to and consist of the following: (1) Real estate consultant - a duly registered and licensed natural person who. For a professional fee, compensation or other valuable consideration, offers or renders professional advice and judgment on: (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon: and (ii) the conception, planning, management and development of development of real estate projects. (2) Real estate appraiser - a duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, performs or renders, or offers to perform services in estimating and arriving at an opinion of or acts as an expert on real estate values, such services of which shall be finally rendered by the preparation of the report in acceptable written form. (3) Real estate assessor - a duly registered and licensed natural person who works in a local government unit and performs appraisal and assessment of real properties, including plants, equipment, and machineries, essentially for taxation purposes. (4) Real estate broker - a duly registered and licensed natural person who, for a professional fee, commission or other valuable consideration, acts as an agent of a party in a real estate transaction to offer, advertise, solicit, list, promote mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture, or other similar transactions on real estate or any interest therein. (5) Real estate salesperson - a duly accredited natural person who performs service for, and in behalf of a real estate broker who is registered and licensed by the Professional Regulatory Board of Real Estate Service for or In expectation of a share in the commission, professional fee, compensation or other valuable consideration. h. "Accredited and Integrated Professional Organization (IAPO)" - the national integrated organization of natural persons duly registered and licensed as Real Estate Service Practitioners that the Board, subject to the approval by the Commission, shall recognize or accredited as the only AIPO, pursuant to Sec. 34, Art of R.A No.9646 i. "Interim Accredited Professional Organization (IAPO)" - the professional organization accredited by the Commission only to operate and perform activities or acts prior to and until the recognition or birth of the AIPO as defined in h. above. RULE II PROFESSIONAL REGULATORY BOARD OF REAL ESTATE SERVICE SEC.4 Creation and Composition of the Board - There is hereby created a Professional Regulatory Board of Real Estate Service, hereinafter referred to as the Board, under the supervision and administrative control of the Professional Regulation Commission (PRC), hereinafter referred to as the Commission, composed of a chairperson and four (4) members who shall appointed by the President of the Philippines from the three (3) recommendees chosen by the Commission from a list of five (5) nominees per position submitted by the accredited and integrated professional organization of real estate service practitioners: Provided, That two (2) of the members of the Board shall represent the government assessors and appraisers, who are both in active government service. The first Board shall be organized within six (6) months from the effectivity of R.A No. 9646. This provision shall be implemented in accordance with the guidelines of Executive Order No. 496, Series of 1991 on the selection, nomination, recommendation, and appointment of those who will fill up any vacancy in the Board. SEC.5 Power and Functions of the Board - The Board is hereby vested the following specific power and functions: (a) Provide comprehensive policy guidelines for the promotion and development of the real estate industry in relation to the regulation of the practice of the real estate service profession; (b) Conduct licensure examinations for the practice of the real estate service profession and prescribe the appropriate, syllabi of the subject for examination with their tables of specification; (c) Issue, suspend revoke or reinstate, after due notice and hearing, certificates of registration or professional identification cards for the practice of real estate service; (a) Maintain a comprehensive and updated register of licensed real estate service professionals; 10

(b) Monitor the conditions affecting the practice of real estate service and adopt such measures as may be proper for the enhancement of the profession and/or the maintenance of high professional, ethical and technical standards; (c) Adopt a national Code of Ethics and Responsibilities issued by the AIPO to be strictly observed by all licensed real estate service practitioners; (d) Hear or investigate any violation of R.A. No. 9646, the IRR and the Code of Ethics and Responsibilities for real estate service practitioners and issues subpoena duces to secure the appearance of witness and the production of document in connection therewith; (e) Safeguard and protect legitimate and licensed real estate service practitioners and, in coordination with the accredited and integrated professional organization (AIPO) of real estate service practitioners, monitor all forms of advertisements, announcements, signboards, billboards. Pamphlets, brochures and other similar nature concerning real estate and, where necessary, exercise its quasi-judicial and administrative powers to finally and completely eradicate the pernicious practices of unauthorized or unlicensed individuals; (f) Prescribe, in cooperation with the Commission on Higher Education (CHED) or the concerned state university or collage, the essential requirement as to the curricula and facilities of schools, colleges or universities seeking permission to open academic courses or already offering such courses in real estate service, and to see to it that these requirements, including the employment of qualified faculty members, are properly complied with; (g) Promulgate, administer and enforce rules and regulations necessary in carrying out the provisions of R.A. No. 9646; (h) Supervise and regulate the registration, licensure and practice of real estate service in the Philippines; (i) Assess and fix the rate of reasonable regulatory fees; (k) Adopt an official seal of the Board with the interpretation of its symbols attached to this Resolution and made part thereof as Annex "A"; (l) Evaluate periodically the status of real estate service education and profession, and recommend and/or measures to upgrade and maintain its high standard; (m) Prescribe guidelines and criteria for the Continuing Professional Education (CPE) program for real estate service practitioners in consultation with the accredited and integrated professional organization of real estate practitioners; (n) Screen, issue and monitor to organizations of real estate professional in the conduct of seminar and accredit such pursuant to the CPE program, as well as the instructors or lecturer therein , for the purpose of upgrading the quality and knowledge of the profession; (o) Monitor and supervise the activities of the accredited and integrated professional organization (AIPO) and other associations of real service practitioners; and (p) Discharge such other powers, duties and functions as the Commission may deem necessary to carry out the provisions of R.A. No. 9646. The policies, resolutions and rules and regulations issued or promulgates by the Board shall be subject to the review and approval by the Commission. However, the Board's decisions, resolutions or orders which are not interlocutory, rendered in an administrative case, shall be subject to review by the Commission only on appeal, in accordance with Republic Act No. 8981 and its Implementing Rules and Regulations. SEC.6. Qualifications of the Chairpersons and Members of the Board. The Chairperson and the Members of the Board shall, at the time of their appointment, possess the following qualifications: (a) citizen and resident of the Philippines; (b) holder of bachelor's degree related to real estate; (c) An active licensed practitioner of real estate service for at least ten (10) years prior to his/her appointment; (d) A bona member in good standing of the accredited and integrated professional organization of real estate service practitioners but not an officer or trustee at the time of his/her appointment; (e) Neither be a member of the faculty of an institute, school, college or university, nor have any pecuniary interest, direct or indirect, in any institution or association where review classes or lectures in preparation for the licensure examination are being offered or conducted; and (f) Of good moral character, and must not have been convicted by final judgment by a competent court of a criminal offence involving moral turpitude. SEC.7 Term of Office. The chairperson and the members of the Board shall hold office for a term of three (3) years from the date of their appointment and until their successor/s shall have been appointed: Provided, That the members of the first appointed Board shall hold office for the following terms: one (1) member as chairperson, to serve for three (3) years; two (2) members, to serve for two (2) years; and two (2) members, to serve for one (1) year. The Chairperson and the Members of the Board may be reappointed for a second term but in no case shall he/she serve continuously for more than six (6) years. Any vacancy in the Board shall be filled for the unexpired portion of the members who vacated the position. On the constitution of the first Board, the Chairperson and the Members of the Board shall automatically be registered and issued Certificates of Registration and Professional Identification Cards. Each members of the Board shall take the oath to the assumption of duty. 11

SEC. 8 Compensation and Allowances of the Chairperson and Members of the Board. The chairperson and the members of the Board shall receive compensation and allowances comparable to the compensation and allowances received by the chairman and the members of existing professional regulatory boards under the Commission, as provided for in the General Appropriations Act, the Salary Standardization Law, and the Joint Circular issued by the Commission and the Department of Budget and Management (DBM). SEC. 9 Removal of the Chairperson and Members of the Board. The chairperson or any member of the Board may be suspended or removed by the President of the Philippines, upon the recommendation of the Commission and after due notice and hearing in a proper administrative investigation to be conducted by the Commission on the following grounds: 1. Neglect of duly, 2. Abuse of power, 3. Oppression, 4. Incompetence, 5. Unprofessional, unethical conduct, 6. Immoral or dishonorable conduct, 7. Commission or toleration of irregularities in the conduct of examination or tampering of the grades, or 8. For any final judgment or conviction of any criminal offence involving moral turpitude. The Commission in the conduct of the investigation shall be guided by Sec. 7 (s) of R.A. No. 8981 and its rules on administrative investigation. SEC. 10 Supervision of the Board, Custodian of its Records, Secretariat and Support Service. The Board shall be under the general supervision and administrative control of the Commission. All records of the Board, including applications for examination, examination papers and results, minutes of deliberations, administrative and other investigative cases involving real estate service practitioners, shall be kept by the Commission. The Commission shall designate the secretary of the Board at the office, Secretary, Professional Regulatory Boards and shall provide the secretariat and other support services to implement the provisions of R.A. No. 9646 subject to the usual government accounting and auditing rules and regulations SEC. 11 Annual Report. The Board shall, at the close of each calendar year, submit an annual report to the Commission, giving a detailed account of its proceedings and accomplishments during the year and recommending measures to be adopted with the end-in-view of upgrading and improving the conditions affecting the practice of real estate service in the Philippines. RULE II LICENSURE EXAMINATION AND REGISTRATION SEC. 12 Licensure Examination. Every applicant seeking to be registered and licensed as a real estate service practitioner, except a real estate salesperson, shall undergo an examination to be given by the Board as provided for in R.A. No. 9646. Examinations for the practice of real estate service in the Philippines shall be given by the Board in such places and dates as the Commission may designate in the Master Schedules of Board Licensure Examinations for Professional for the year as issued by the Commission. Sec. 13 Scope of Examination. The licensure examination for the applicants for real estate brokers, real estate appraisers and real estate consultants shall cover, but no limited to the following (a)For real estate consultants: 1. fundamentals of real consulting; 2. Standards and ethics; 3. Consulting tools and techniques, which include project feasibility study and investment measurement tools; 4. Real estate finance and economics; 5. Real estate consulting and investment analyses; 6. Consulting for specific engagement, which includes consulting for commercial, industrial, recreation and resort and hotel properties, and consulting for government and corporate and financial institutions; 7. Land Management system and real property laws; and 8. any other related subjects as may be determined by the Board; (b)For real estate appraisers: 1. Fundamentals of real estate principles and practices; 2. Standards and ethics; 3. Theories and principles in appraisal; 4. Human and physical geography; 5. Methodology of appraisal approaches 6. Valuation procedures and research; 7. Appraisal of machinery and equipment; 12

8. 9. 10. 11. 12. 13.

Practical appraisal mathematics; Appraisal report writing; Real estate finance and economics; Case studies; Land management system and real property laws; and any other related subjects as may be determined by the Board; and

(c)For real estate brokers: 1. Fundamentals of property ownership; 2. Code of ethics and responsibilities; 3. Legal requirements for real estate service practice; 4. Real estate brokerage practice; 5. Subdivision development; 6. Condominium concept and other real estate holdings; 7. Real estate finance and economics; 8. Basic principles of ecology; 9. Urban and rural use; 10. Planning, development and zoning; 11. Legal aspect of sale, mortgage and lease; 12. Documentation and registration; 13. Real property laws and taxation; and 14. any other related subjects as may determined by the Board To conform to technological and modern developments, the Board may re-cluster, rearrange, modify, add to, or exclude any of the foregoing subjects and their syllabi with tables of specifications as may be necessary. SEC. 14 Qualification of Applicants for Examinations. In order to be admitted to the licensure examination for real estate service, a candidate at the time of filing his/her application, shall establish to the satisfaction of the Board that he/she possesses the following qualifications: a) A citizen of the Philippines, b) A holder of a relevant bachelor's degree from a estate university or college, or other educational institution duly recognized by the CHED: Provided, That he/she has completed at least one hundred twenty (120) credit units of real estate subjects and training from accredited service providers, as may be determined by the Board; Provided, further, that as soon as a course leading to a Bachelor's degree in Real Estate Service is implemented by the CHED, the Board shall make this course a requirement for taking the licensure examination, c) Is of good moral character, and must not have been convicted of any crime involving moral turpitude, d) An application for the licensure examination for real estate consultants must show proof that he/she has at least ten (10) years experience as a licensed real estate broker, or an assessor, or as a bank, or institutional appraiser, or an employed person performing real property valuation, or at least five (5) years experience as a licensed real estate appraiser. All applications for examination shall be filed with the Board who shall assess and approve said applicants and issue to the qualified examines the corresponding permits or notices of admission to take such examination upon submission of the following documents: 1. Original and photocopy of Birth Certificate or Certificate of Live Birth (NSO) and / or valid Philippine passport, or any other proof of citizenship, 2. Original and photocopy of transcript of records and / or diploma with scanned picture, 3. Original and photocopy of notarized certification by employer of his/her years of experience or prerequisite Certificate of Registration (COR) and / or Professional Identification Card (PIC) or DTI license (for real estate consultants), 4. Original and photocopy of NBI clearance, 5. Original and photocopy of duly notarized accredited seminar and / or training certificate, 6. Community tax certificate, 7. Four (4) colored passport size pictures with background and complete nametag and other documents in accordance with the requirements set by the Commission. SEC. 15 Rating in the Examination. In order that a candidate may be deemed to have successfully passed the examination, he/she must have obtained an average of at least seventy-five percent (75%) in all subjects, with no rating below fifty percent (50%) in any subject. The board may adopt its own internal procedure on the implementation of this provision. The reports of ratings may be distributed to the successful examinees during their mass oath taking. SEC. 16 Release of the Results of Examination. The results of the licensure examination shall be released by the Board within ten (10) days from the last day of the examination. The results shall be published in a daily major newspaper of general circulation and PRC website. 13

SEC. 17 Issuance of the Certificate of Registration and Professional Identification Card. A certificate of registration shall be issued to examinees who pass the licensure examination for real estate service practice, subject to payment of fees prescribed by the Commission. The certificate of registration shall bear the signature of the chairperson of the Commission and the chairperson and the members of the Board, stamped with the official seal of the Commission, indicating that the person named therein is entitled to practice the profession with all the benefits and privileges appurtenant thereto. This certificate of registration shall remain in full force and effect until revoked or suspended in accordance with R.A. No. 9646. A Professional Identification Card bearing the registration number, date of issuance and expiry date, duly signed by the chairperson of the Commission, shall likewise be issued to every registrant upon payment of the required fees. The professional identification card shall be renewed every three (3) years and upon satisfying the requirements of the Board such as, but not limited to, attendance in the CPE program. SEC. 18 Refusal to Register. The Board shall not register and issue a certificate of registration to any successful examinee who has been convicted by a court of competent jurisdiction of any criminal offense involving moral turpitude or has been found guilty of immoral or dishonorable conduct after investigation by the Board, or has been found to be psychologically unfit. SEC. 19 Revocation or Suspension of the Certificate of Registration and the Professional Identification Card or Cancellation of Special/Temporary Permit. The Board may, after giving proper notice and hearing to the party concerned, revoke the certificate of registration and the professional identification card, or cancel the special/temporary permit of a real estate service practitioner, or suspend him/her from the practice of the profession on any of the following instances hereunder. (a) Procurement of a certificate of registration and or/ professional identification card, or special/temporary permit by fraud or deceit; (b) Allowing an unqualified person to advertise or to practice the profession by using one's certificate of registration or professional identification card, or special/temporary permit; (c) Unprofessional or unethical conduct; (d) Malpractice or violation of any of the provisions of R.A. No. 9646, the IRR, and the Code of Ethics and Responsibilities for real estate service practitioner; and (e) Engaging in the practice of the professional during the period of one's suspension. The rules on administrative investigation issued by the Commission shall govern the hearing or investigation of the case, subject to the applicable provisions of R.A. No. 8981, R.A. No. 9646, and the Rules of Court; Provided, That the suspension or revocation of the Certificate of Registration and Professional Identification Card, or the cancellation of the Temporary/Special Permit of the respondent professional shall not prejudice his/her prosecution for criminal liabilities and the imposition of the penalties under R.A. No. 8981, R.A. 9646, under the Revised Penal Code, or any other special law. SEC. 20 Registration Without Examination. Upon application and payment of the required fees, the following shall be registered, and shall be issued by the Board and the Commission a certificate of registration and a professional identification card without taking the prescribed examination: (a) Those whose, on the date of the effectivity of R.A. No. 9646 or as of 30 July 2009, are already licensed as real estate brokers, real estate appraiser or real estate consultants by the Department of Trade and Industry (DTI) by virtue of Ministry Order No. 39, as amended: Provided, that they are in active as real estate brokers, real estate appraisers, and real estate consultants, and that they have undertaken relevant Continuing Professional Education (CPE) or Continuing Education Program (CPE) to the satisfaction of the Board: Provided, further, that the following practitioners shall be allowed to register: 1. Any holder of the a valid DTI license who has earned fifteen (15) Continuing Education Program (CPE) or CPE credit units; 2. Those who had failed to renew their DTI License prior to 30 July 2009 but who have earned twenty-four (24) CPE credit units from accredited service providers as per M.O. 39 or CPE credit units from CPE Council Accredited Provider from 2007 to July 30, 2011; 3. Those who had passed the 2009 & 2008 licensure examinations given by the DTI but who had failed to obtain their license upon the affectivity of the R.A. No. 9646 and who have earned fifteen (15) CPE or CPE credit units; 4. Those who had passed the 2007 licensure examinations given by the DTI but who had failed to obtain their license upon the effectivity of the R.A. No. 9646 and who have earned eighteen (18) CPE or CPE credit units; 5. Those who had passed the DTI licensure examinations in 2006 and prior years but who had failed to obtain their license upon the effectivity of R.A. No. 9646 and who have earned one hundred twenty (120) CPE or CPE credit units; Provided, finally, that real estate practitioners falling the above-described categories who fail to comply with the necessary CPE requirements within two (2) years after the efectivity of R.A. No. 9646, on or before 30 July 2011, shall be required to take the Board licensure examination for real estate service practitioner; 14

(b) Assessors and appraisers who, on the date of the effectivity of R.A. No. 9646 or as of 30 July 2009, hold permanent appointments and are performing actual appraisal and assessment functions for the last five (5) years, have passed the Real Property Assessing Officer (RPAO) examination conducted and administered by the Civil Service Commission (CSC) in coordination with the Department of Finance (DOF), and have undertaken relevant CPE to the satisfaction of the Board; and (c) Assessors and appraisers who, on the date of the effectivity of R.A. No. 9646 or as of 30 July 2009, hold permanent appointments and have at least ten (10) years actual experience in real property appraisal or assessment and have completed at least one hundred twenty (120) hours of accredited training on real property appraisal conducted by national or international appraisal organizations or institutions/entities, duly certified by the Department of Finance (DOF) or any other pertinent national government agencies or Government Owned and Controlled Corporations (GOCC) as the case may be, recognized by the Board and relevant CPE credit units to the satisfaction of the Board. Those falling under categories (b) and (c) shall register with the Board after they shall have complied with the requirements for registration as real estate appraisers, and have completed twenty four (24) CPE credit units. Provided, that those seeking to be licensed to a new credential level shall be required to take the pertinent Board licensure examination for real estate practitioners. Those so exempt under the aforementioned categories shall file their applicant within two (2) years from the effectivity of Republic Act No. 9646 or until 30 July 2011. Provided, that the renewal of the professional identification card is subject to the provisions of Section 17, Art. III of R.A. No. 9646. An applicant for registration without examination must submit the following documents: 1. Original and photocopy of Certificate of Live Birth/Birth Certificate (NSO), or valid Philippine passport, or any other proof of citizenship; 2. Original and photocopy of Certificate of Registration (COR) and / or Professional Identification Card (PIC) or DTI License; 3. DTI certificate of Rating (for those who passed the examination but failed to obtain their license), 4. Original and photocopy of NBI Clearance, 5. Duly notarized CEP/CPE Certification, 6. Civil Service Commission Certificate, DOF, or any other national government agencies or, GOCC Certificate (assessors or government appraisers), or any certificate of accredited seminar/training provider, 7. Appointment papers and service to prove appraisal or assessment experience (for assessors of government appraisers), 8. Four (4) passport size colored photos with complete nametag in white background, original and photocopy of community tax certificate (CTC) , and surety bond for real estate brokers and private real estate appraisers. SEC. 21 Reinstatement, Re-issuance or Replacement of Certificate of Registration, Professional Identification Card and Special/Temporary Permit. The Board may, after the examination of two (2) years from the date of revocation of a certificate of registration and/or professional identification card, and upon application and compliance with the required CPE units, and for the reasons deemed proper and sufficient, reinstate any revoke certificate of registration and reissue a suspended identification card and in so doing, may, in its discretion, exempt the applicant from the taking another examination; Provided, that the Board shall issue a resolution subject to the approval of the Commission in granting a petition for reinstatement to the practice of real estate service profession. A new certificate of registration, professional identification card or special/temporary permit may be issued to replace lost, destroy or mutilated ones, subject to the rules as may be promulgated by the Board and the Commission, upon payment of the required fees therefor. SEC. 22 Roster of Real Estate Service Practitioner. The Board, in coordination with the AIPO of real estate service practitioners, shall prepare, update and maintain a roster of real estate service practitioners which shall contain the names of all registered estate service practitioners, their residence and office address, license numbers, date of registration or issuance of certificates, and other data which the Board may deem pertinent. Copies thereof shall be made available to the public upon request. SEC. 23 Issuance of Special/Temporary Permit. Upon application and payment of the required fees and subject to the approval of the Commission, the Board may issue special/temporary permit to real estate service practitioners from foreign countries whose services are urgently needed in the absence or unavailability of local real estate service practitioners for the propose of promoting or enhancing the practices of the profession in the Philippines. SEC. 24 Foreign Reciprocity. No foreign real estate service practitioners shall be admitted to the licensure examination, be given a certificate of registration or a professional identification card, be issued a Special/Temporary Permit, or be entitled to any of the privileges under R.A. No. 9646 and the IRR unless the country of which he/she is a citizen of specifically allows Filipino real estate service practitioners to practice within its territorial limits on the same basis as the citizens of such foreign country; Provided, That the guidelines 15

therefor issued by the Commission, or by the Board subject to approval by the Commission, shall govern the provisions of foregoing Sec. 23 and of the herein Sec. 24. RULE IV PRACTICE OF REAL ESTATE SERVICE SEC. 25 Oath. All successful examinees qualified for registration, all qualified applicants for registration without examination and accredited salespersons shall be required to take the oath before any member of the Board or any officer of the Commission duly authorized by the Commission to administer oaths prior to entering into the practice of real estate service in the Philippines Provided, That the mass oathtakng of the foregoing may be initiated and supervised by the Board in coordination with the AIPO. SEC. 26 Professional Indemnity Insurance/Cash or Surety Bond. All real estate brokers and private real estate practitioners shall, in addition to the oath referred to in the preceding section, be required to post a professional indemnity insurance/cash or surety bond, in an amount to be determined by the Board, which in no case shall be less then Twenty thousand pesos (P20,000.00), without prejudice to the additional requirement of the client. It will be renewable every three (3) years. SEC. 27 Acts Constituting the Practice of Real Estate service. Any single act or transaction embrace within the provisions of Section 3(g), Rule II hereof, as performed by the real estate service practitioners, shall constitute an act of engaging in the practices of real estate service. SEC. 28 Exemptions from the Acts Constituting the Practice of Real Estate Service. The provisions of R.A. No. 9646 and the IRR shall not apply to the following: (a) Any person, natural or juridical, who shall directly perform by himself/herself the acts mentioned in Section three hereof with reference to his/her or its own property, except real estate developers who are regulated by and registered with the Housing and Land Use Regulatory Board (HLURB) pursuant to law and other resolutions/regulations such as but nut limited to Presidential Decree (PD) 957, as amended, and Batas Pambansa Blg. 220 and their Implementing Rules and Regulations; (b) Any receiver, trustee or assignee in bankruptcy or insolvency proceedings; (c) Any person acting pursuant to the order of any court of justice (d) Any person who is a duly constituted attorney-in-fact for purposes of sales, mortgage, lease or exchange, or other similar contracts or real estate, without requiring any form of compensation or remuneration; and (e) Public Officers in the performance of their official duties and functions, except government assessors and appraisers. SEC. 29 Prohibition Against the Unauthorized Practice of Real Estate Service. No person shall practice or offer to real estate service in the Philippines or offer himself/herself as real estate service practitioner, or use the title, word, figure or any sign tending to convey the impression that the one is a real estate service practitioner, or advertise or indicate in any manner whatsoever that one is qualified to practice the profession, or be appointed as real property appraiser or assessor in any national government entity or local government unit, unless he/she satisfactory passed the licensure examination given by the Board, excepts as otherwise provided in R.A. No. 9646 and the IRR is a holder of valid certificate of registration and professional identification card or a valid special/temporary permit duly issued to him/her by the Board and the Commission; and, in the case of real estate brokers and private appraisers, they paid the required bond as provided for in R.A. No. 9646. SEC. 30 Positions in Government Requiring of Registration and Licensed Real Estate Service Practitioners. Within three (3) years from the effectivity of R.A. No. 9646, all existing and new position in the national and local governments, whether career, permanent, temporary or contractual, primarily requiring the services of any real estate service practitioner, shall be filled only by registered and licensed real estate service practitioners. All incumbent assessors holding permanent appointments shall continue to perform their functions without need for re-appointment and without diminution of status, rank and salary grade, and shall enjoy security of tenure. However, they may not be promoted to a higher position until they meet the qualification requirements of that higher position as herein prescribed. Nothing in R.A. No. 9646 and the IRR shall be construed to reduce any benefit, interest, or right enjoyed by the incumbents at the time of the enactment of R.A. No. 9646. The appointing shall exercise his power to appoint the assessor in accordance of R.A. No, 9646 and the IRR only a vacancy occurs. SEC. 31 Supervision of real Estate Salespersons. For real estate salespersons, no examination shall be given, but they shall be accredited by the Board, provided that they have completed at least two (2) years of college and have undergone training and seminars of at least twelve (12) credit units in real estate brokerage. Those salespersons who are registered with the DTI/HLURB or other salespersons who are in the active practice for at least three (3) years, as may be certified by a licensed broker or a real estate developer, prior to the effectivity of R.A. no. 9646 may also be accredited by the Board until 30 July 2011. Provided, that in both cases, such Real Estate Salespersons must have undergone at least one hundred twenty (120) training hours in real estate brokerage, and have submitted original NSO certificate, NBI clearance, certificate of education attainment or its equivalent, notarized certificate of training or seminar and notarized certificate of their supervising licensed brokers, as may 16

required by the Board. Real estate salesperson shall be the direct supervision and accountability of real estate broker. As such, they cannot by themselves be signatories to a written agreement involving a real estate transaction unless the real estate broker who has direct supervision and accountability over them is also a signatory thereto. No real estate salesperson, either directly, can negotiate, mediator transact any real estate transaction for and in behalf of a real estate broker without first securing an authorized accreditation as real estate salesperson for the real estate broker, as prescribed by the Board. A real estate shall be guilty of violating R.A. No. 9646 or the IRR for employing or utilizing the services of a real estate salesperson when he/she has not secured the required accreditation form the Board prior to such employment. No salesperson shall be entitled to receive or demand a fee, commission or compensation of any kind from any person, other than the duly licensed real estate broker who has direct control and supervision over him, for any service rendered or work done by such salesperson in any real estate transaction. No violation of this provision shall be a cause for revocation or suspension of the certificate of registration of the real estate broker unless there was actual knowledge of such violation or the broker retains the benefits, profits or proceeds of a transaction wrongfully negotiated by the salesperson. SEC. 32 Corporate Practice of the Real Estate Service. (a) No partnership or coordination shall engage in the business of real estate service unless it is duly registered with the Securities and Exchange Commission (SEC), and the persons authorized to act for the partnership or corporation are all duly registered and licensed real estate brokers, appraisers or consultants, as the case may be. The partnership or corporation shall regularly submit a list of its real estate service practitioners to the Commission and to the SEC as part for every twenty (20) accredited salespersons. (b) Division or departments of partnerships and corporations engage in marketing or selling any real estate development project in the regular course of business must be headed by full-time registered and licensed real estate brokers. (c) Branch offices of real estate brokers, appraisers or consultants must be manned by a duly licensed real estate broker, appraiser or consultant as the case may be. In case of resignation or termination from employment of real estate service practitioner, the same shall be reported by the employer to the Board within a period not to exceed fifteen (15) days from the date of effectivity of the registration or termination. Subject to the provisions of the Labor Code, a corporation or partnership may hire the services of registered and licensed real estate brokers, appraisers or consultants on commission basis to perform real estate service and the latter shall be deemed independent contractors and not employees of such corporations. SEC. 33 Display of License in the Place of Business. Every registered and licensed real estate service practitioner shall establish and maintain a principal place of business and such other branch offices as may be necessary, and shall conspicuously display therein the original and/or certified true copies of registration and professional identification cards of all the real estate service practitioners employed in such office. SEC. 34 Accreditation and Integration of Real Estate Service Association. All real estate service association shall be integrated into one (1) national organization, which shall be recognized by board, subject to the approval of the commission, as the only accredited and integrated professional organization of real estate service practitioners pursuant to PRC Res. No 2004-178, series of 2004. A real estate service practitioner duly registered with the board shall automatically become a member of the accredited and integrated professional organization of real estate service practitioner, and shall receive the benefits and privileges appurtenant thereto; Provided That the board, subject to approval by the commission, shall issue a resolution on the membership and payment of the fee therefore as a requirement fro the renewal of the professional identification card, the automatic membership in the accredited and integrated professional organization of real state service practitioner shall not be a bar to membership in other association of real estate service practitioner SEC. 35 Code of Ethics and Responsibilities for Real Estate Service Practitioner. The board shall adopt and promulgated the code of ethics and responsibilities for real estate service practitioner which shall be prescribed and issued by the accredited and integrated professional organization (AIPO) of real estate service practitioner. SEC. 36 Continuing Professional Education (CPE) Program. The board shall develop, prescribed and promulgated guidelines on CPE upon consultation with the accredited and integrated professional organization of real estate service practitioner, affiliated association of real estate service practitioners and other concerned sectors, and in accordance with such policies as may have been prescribed by the board, subject to the approval of the commission .the board shall create a CPE council that shall be composed of a chairperson coming board ,a member from the accredited and integrated professional organization of real estate service practitioner and a member from the academe. SEC. 37 Enforcement Assistance to the Board. The board shall be assisted by the commission in carrying out the provisions of R.A No. 9646 and the IRR and other policies. The lawyers of the commission shall act as prosecutors against illegal practitioner and other violations of R.A No. 9646 and the IRR. The duly constituted 17

authorities of the government shall likewise assist the board and commission in enforcing the provisions of R.A No.9646 and the IRR. SEC.38 Indication of the certificate of registration, professional identification card/license number, privilege tax receive (PTR)number ,accredited integrated professional organization(AIPO)number. Real estate service practitioner shall be required to indicate the certificate of registration, professional identification card, PTR number and AIPO membership and or receipt issue in connection with the practice of his/her profession.,

RULE V PENAL AND FINAL PROVISIONS SEC. 39 Penal Provisions. Any violation of R.A. 9646, including violations of this IRR, shall be meted the penalty of a fine of not less than one hundred pesos (P100,000.00) or imprisonment of not less than two (2) years, or both such fine and imprisonment upon the discretion of the court. In case the violation is committed by an unlicensed real estate service practitioner, the penalty shall be double the aforesaid fine and imprisonment. In case the violation is committed, by a partnership, corporation, association or any other juridical person, the partner, president, director or manager who has committed or consented to or knowingly tolerated such violation shall be held directly liable and responsible for the acts as principle or as a co-principal with other participants, if any. SEC. 40 Appropriations. The chairperson of the Professional Regulation Commission shall immediately include in the Commission's programs the implementation of R.A. No. 9646 and the IRR the funding of which shall be included in the annual General Appropriations Act and thereafter. SEC. 41 Transitory Provision. Within ninety (90) days from the effectivity of R.A. No. 9646, the DTI-Bureau of Trade Regulation and Consumer Protection (BTRCP) shall transfer all pertinent records, documents and other materials to the Professional Regulatory Board of Real Estate Service. SEC. 42 Implementing Rules and Regulations. Within six (6) months after the effectivity of R.A. No.9646, the Commission, together with the Board and the accredited and integrated professional organization of real estate service practitioners, the Department of Finance, and the CHED, shall prepare the necessary rules and regulations, including the Codes of Ethics and responsibilities for real estate service practitioners, needed to implement the provisions of R.A. No. 9646. The Board shall issue and promulgate a resolution for the IRR subject to review and approval by the Commission. Nothing in R.A. No. 9646 and the IRR shall be construed or interpreted to effect or prevent the practice of any other profession legally regulated by any other professional regulatory law. SEC. 43 Separability Clause. If any clause, sentence, paragraph or part of the IRR shall be declared unconstitutional or invalid, such judgment shall not affect, invalidate or impair any other part thereof. SEC. 44 Repealing Clause. 1. Section 3(e) and (ee) of Act No. 2728, as amended by Act No. 3715 and Act No. 3969, Sections 472 and 473 of the Local Government Code of 1991 (Republic Act No. 7160), and pertinent provisions of the Civil Service Law are hereby modified accordingly. 2. All laws, decrees, executive orders, department or memorandum orders and other administrative issuances or parts thereof which are inconsistent with the provisions of R.A. No. 9646 and / or the IRR are hereby modified, superseded or repealed accordingly. SEC. 45 Effectivity. The IRR shall take effect after fifteen (15) days following its full and complete publication in the Official Gazette or in a major daily newspaper of general circulation in the Philippines. Done in the City of Manila this 21st day of July, 2010 Published July 24, 2010 [ Philippines Daily Inquirer and The Philippines Star ] C. PERTINENT PROVISIONS OF PD 957 AND IRR PRESIDENTIAL DECREE NO. 957 Subdivision and Condominium Buyer's Protective Decree (as amended by P.D. 1216) REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF Title 1 TITLE AND DEFINITIONS 18

SECTION 1. Title- This Decree shall be known as THE SUBDIVISION AND CONDOMINIUM BUYERS' PROTECTIVE DECREE. SECTION 2. Definition of Terms- When used in this Decree, the following terms shall, unless the context otherwise indicates, have the following respective meanings: xxxxxx b) Sale or sell- "Sale" or "sell" shall include every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot, including the building and other improvements thereof, if any, in a subdivision project or a condominium unit in a condominium project. "Sale" and "sell" shall also include a contract to sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular, letter, advertisement or otherwise. A Privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to, any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition. c) Buy and purchase- The "buy" and "purchase" shall include any contract to buy, purchase, or otherwise acquire for a valuable consideration a subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project. xxxxxx 1) Broker- "Broker" shall mean any person who, for commission or other compensation, undertakes to sell negotiate the sale of a real estate belonging to another. m) Salesman- "Salesman" shall refer to the person regularly employed by a broker to perform for and in his behalf, any or all functions of real estate broker. xxxxxx Title III DEALERS, BROKERS AND SALESMEN SECTION 11. Registration of Dealers, Brokers and Salesmen- No real estate dealer, broker or salesman shall in the business of selling subdivision lots or condominium units unless he has registered himself with the Authority in accordance with the provisions of this section. If the Authority shall find that the applicant is of good repute and has complied with the applicable rules of the Authority, including the payment of the prescribed fee, he shall register such applicant as a dealer, broker or salesman upon filing a bond, or other security in lieu thereof, in such sum as may be fixed by the Authority conditioned upon his faithful compliance with the provisions of this Decree: Provided, that the registration of a salesman shall cease upon the termination of his employment with a dealer or broker. Every registration under this section shall expire on the thirty-first day of December of each year Renewal of registration for the succeeding year shall be granted upon written application thereof made not less than thirty nor more then sixty days before the first of the ensuing year and upon payment of the prescribed fee, without the necessary of filing further statement or information, unless specifically required by the Authority. All applications filed beyond said period shall be treated as original applications. The names address of all persons registered as dealers, brokers, or salesmen shall be recorded in a Register of Broker of Brokers, Dealers and Salesmen kept in the Authority which shall be upon to public inspection. SECTION 12. Revocation of Registration as Dealer, Brokers or Salesmen- Registration under the proceeding section may be refused or any registration granted thereunder, revoked by the Authority if, after reasonable notice and hearing, it shall determine that such applicant or registrant: 1. Has violated any provision of this Decree or any rule or regulation made hereunder, or 2. Has made a material false statement in his application for registration; or 3. Has been guilty of a fraudulent act in connection with any sale of a subdivision lot or condominium units; or 4. Has demonstrated his unworthiness to transact the business of dealer, broker, or salesman, as the case may be. 5. In case of charges against a salesman, notice thereof shall be given the broker or dealer employing such salesman. Pending hearing of the case, the Authority shall have the power to order the suspension of the dealer's, broker's, of salesman's registration; provided, that such order shall state the cause for the suspension. The suspension or revocation of the registration of a dealer or broker shall carry with it all the suspension or revocation of the registrations of all his salesmen. xxxxxx Done in the City of Manila, this 12th day of July, in the year of Our Lord, nineteen hundred and seventysix. 19

(Sgd.) FRDINAND E. MARCOS President of the Philippines REVISED RULES AND REGULATIONS IMPLEMENTING THE SUBDIVISION AND CONDOMINIUM BUYER'S PROTECTIVE DECREE (PD 957) AND OTHER RELATED LAWS Pursuant to Article IV Section 5 c) of Executive Order No. 648 the following rules are hereby promulgated by the Housing Land Use regulatory Board (HLURB) to implement Presidential Decree No. 957, 1344 and related laws applicable to open market and medium cost subdivision and condominium projects. xxxxxx RULE V REGISTRATION OF REAL ESTATE DEALERS, BROKERS AND SALESMEN Section 13. Application for Registration of Brokers and Salesmen No broker or salesman shall engage in the business of selling subdivision lots or condominium units without securing a certificate of registration by filing with the Board a registration statement in quadruplicate containing the following information: a. Name, age and address b. If a corporation, partnership, or association, its office addresses and branch offices and the names and address of its executive officers and directors. c. Statement that applicant is qualified to act as real estate broker or salesman pursuant to law. d. If applicant is a salesman, the name and address of the dealer or broker who employs him, attaching a copy of appointment e. If the applicant is a broker, the names and address of salesmen employed by him. Section 14. Certificate of Registration The certificate of registration for brokers and salesmen shall expire on the first day of December each year. Renewal of registration for the succeeding year shall be granted upon filing an applicant made not less than 30 or more than 60 days of the ensuing year and upon payment of the prescribed fee without the necessity of filling further statement or information, unless specified by the Board. All applications filed beyond said period shall be treated as original application. Section 15. Bonds The Board required under Section 6 of the Decree may be either a cash or a surety bond issued by a duly accredited bonding company whether private or government agency. The bond shall contain a clause stating among others that it shall remain in full force and effect unless it is ordered, cancelled or released by the Board. The board shall be executed in favor of the Housing and Land Use Regulatory Board conditioned upon the faithful and honest discharge by the applicant, as well as the salesman working under a broker or dealer, of their duties and shall further provide that upon failure to discharge those duties, the applicant shall be liable on the bond to any and all persons who may suffer loss by reason of such failure. The amount of the bond shall be P5,000 for Dealers/Brokers and P1,000 for Salesmen These bonds shall no longer be required if equivalent bonds or securities have already been posted by applicants for the purpose with other government agencies pursuant to law. A dealer, broker or salesman may apply in writing the Board for the cancellation and release of his bond stating therein his reasons. Inappropriate cases, the Board may require the applicant to cause the publication of a notice therefore at the latter's expense in a newspaper of general circulation stating, among others, the fact of such application. The proof of publication shall be submitted to the Board. Any person, having any claim for money or property against the dealer, broker or salesman in his real estate service or practice, must file his claim with the Board within 15 days from the date of publication. If the reason for cancellation of the bond is his cession from further engaging in the business of selling subdivision lots or condominium units, the dealer, broker or salesman shall surrender his certificate of registration to the Board and his name shall be cancelled from the Register of Dealers, Brokers and Salesmen. xxxxxx Section 32. Brokers/Salesman as Witness to Sales The broker or salesman who negotiated the sale of a subdivision lot or condominium units shall act as one of the witnesses to the sales document with an indication of his Certificate of Registration number and renewal date. If the sale was directly made by the owner or dealer, that fact must be so stated in the sales document. xxxxxx 20

Approved August 20, 2001 Quezon City D. LOCAL GOVERNMENT CODE OF 1991, REPUBLIC ACT NO. 7160 [ PERTINENT PROVISIONS GOVERNING REAL ESTATE SERVICE PRACTICE] RESA IRR PROVISION ON PROFESSIONAL TAX SEC. 38 Indication of the certificate of Certificate of Registration, Professional Identification Card/License Number, Privilege Tax Receipt (PTR) Number, and Accredited Integrated Professional Organization (AIPO) Number. Real estate service practitioners shall be required to indicate the certificate of registration, professional identification card, PTR number and AIPO membership and /or receipt number, and the date of issuance and the duration of validity on the documents he/she signs, uses or issues in connection with the practice of his/her profession. LOCAL GOVERNMENT CODE PROVISION ON PROFESSIONAL TAX Section 139. Professional Tax.(a) The province may levy an annual professional tax on each person engaged in the exercise or practice of his professional requiring government examination at such amount and reasonable classification as the Sangguniang Panlalawigan may determine but shall in no case exceed Three Hundred Pesos (P300.00). (b) Every person legally authorized to practice his profession shall pay the professional tax to the province where he practice his professional or where he maintain his principle office in case he practice his profession in several places: Provided, however, That such person who has paid the corresponding professional tax shall be entitled to practice his profession in any part of the Philippines without being subjected to any other national or local tax, license, or fee for the practice of such profession. (c) Any individual or corporation employing a person subject to professional tax shall require payment by the tax on his profession before employment and annually thereafter. (d) The professional tax shall be payable annually, on or before the thirty-first (31st) day of January. Any person first beginning to practice a profession after the month of January must, however, pay the full tax before engaging therein. A line of profession does not become exempt even if conducted with some other profession for which the tax has been paid Professionals exclusively employed in the government from the payment of this tax. (e) Any person subject to the professional tax shall write in deeds, receipts, prescriptions, reports, books of account, plans and designs, surveys and maps, as the case may be, the number of the official receipt issued to him Date Mr. JUAN DELA CRUZ AAA REALTY Metro Manila AUTHORITY TO SELL [SAMPLE] This will authorize you to procure a buyer for the sale of my property under the following terms and conditions: 1. 2

Location : Description: Block No.

Lot No. TCT No. or sq. m. more or less

. 3. Area : 4. Improvements: 5 Price : P /sq.m. or P 6. Mortgage : P with to expire on : 7. Expenses : Documentary stamps to be affixed on the Deed of Sales, real estate taxes up to the time of sale and capital taxes if any, shall be for the account of the Seller, Registration and transfer fees shall be for the account of the buyer. 8. Commission: Five percent (5%) of the total selling price; 9 Period of Authority: days exclusive from date hereof until , 19 ; 10. Remarks : That notwithstanding the expiration of this Authority, you shall still be entitle to your commission in case your buyer (s) whom you previously registered with us buys the above property within sixty (60) days from the expiration of this authority; It is also understood that the term of this Authority, all negotiation regarding the sale of the above property shall be coursed through you. You are also authorized to accept and/or receive Earnest Money from the buyer, the same shall be divided equally between us. 11

Place and Date:

Owner/Seller/Attorney-in-Fact

21

Address: Tel. No.: ACCEPTANCE: AAA REALTY By: Juan De La Cruz, REALTOR PRC Real Estate Brokers License No. 8001

22

CODE OF ETHICS REAL ESTATE SERVICE/IRR PROVISIONS ON THE CODE OF ETHICS AND RESPONSIBILITIES SEC. 5. Powers and Functions of the Board. - The Board is hereby vested the following powers and functions: xxxxxx F. Adopt a national Code of Ethics and Responsibilities to be strictly observed all licensed real estate service practitioners: xxxxxx SEC.35. Code of Ethics and Responsibilities for Real Estate Service Practitioners. - The Board shall adopt and promulgate the Code of Ethics and Responsibilities for real estate service practitioners which shall be prescribed and issued by the accredited and integrated professional organization of real estate service practitioners. / Secs. 5f and 35, also of IRR of RESA. / NATIONAL CODE OF ETHICS FOR THE REALTY SERVICE PRACTICE INTRODUCTION The Realty Service Practice, a profession, calling or occupation, is dedicated to the promotion, development including proper zonification and conservation of land and natural resources, including improvements and rights and interests appurtenant thereto for the benefit and enjoyment of the Filipino people. As such, those engaged therein are bound by a code of conduct, morals, and values in the performance of their and obligations towards the obligations towards the government co-practitioners and the people they serve. It is, therefore, imperative and necessary to adopt this NATIONAL CODE OF ETHICS for REALTY SERVICE PRACTICE to govern the role of conduct of those who will engage therein. ARTICLE I. DECLARATION OF PRINCIPLES SECTION1 - The Realty Service Practice is a noble profession, calling or occupation and those engaged therein shall abide by and comply with all the laws, decrees, orders and rules and regulations enacted or promulgated by duly constituted government authorities. SECTION2 - Utmost fidelity, sincerity, respect for colleagues in the profession, and honesty shall be observed at all times by those in the realty service practice in their relation client, the community and the nation in general. SECTION3 - Adequate knowledge, competence and expertise in real estate development and management; and the upgrading of the standards of practice shall be affected when need arises; all these for, and in the interest of the social and economic progress of the country. SECTION4 - The spirit of camaraderie, cooperation and professional relationship by respecting the rights of the other practitioners shall be promoted, and every organization to which they shall be encouraged to join shall have such aims and purposes as it will set up, upgrade, and maintain a high level of integrity, honesty and competence in the profession for the best interest the community and the nation. SECTION5 - A high level of professional and respect relationship with colleagues in the Realty Service Practice shall be maintained, and their dealings with each other shall always be fair, honest and just. SECTION 6 - The Golden Rule which reads; "Treat others as you like them to treat you" shall be observed in all the dealings and relation of the practitioners with clients, fellow practitioners, the organization to which they belong and the general public. ARTICLE II. SCOPE AND PURVIEW OF THE CODE SECTION 1- As used in this code and for the purpose thereof. The Realty Service Practice shall embrace and include all persons, partnerships or corporations who are duly licensed by the Department of Trade and Industry in accordance with Section3(e) and (ee) of Act No. 2728 as amended by Act No. 3715 and 3969 and Ministry Order No.39. Series of 1985 as real estate salesman, broker, appraiser or consultant and such other practitioners as the Directors of the Department of Trade and Industry may now or hereafter license pursuant to 23

any law, rule or regulation that may be promulgated by the government. They shall be called Realty Service Practitioners hereinafter known as the Practitioners. ARTICLE III. RULES OF CONDUCT AND PRACTICE The practitioners shall be governed by the following rules of conduct and practice; SECTION1. Relation to the Government (a) The practitioner should secure all the necessary licenses, permits and authority from the Department of Trade and Industry and other government agencies as may required by law, ordinance or rules and comply with all the requirements thereof before engaging in the same; (b) He should pay any and all taxes, fees, dues levies or charges that the government may impose in accordance to law, ordinance, or rules and regulations; (c) He should help, assist and cooperate with the Department of Trade and Industry and all government agencies and instrumentalities in the promotion, development, proper zonification and conservation of lands and other natural resources; its improvements and rights and interests therein; (d) He should not encourage, abet, tolerate or participate in the evasion or illegal reduction in the payment of all taxes, fees, dues, levies or charges that may be imposed by the government; (e) He should not offer or agree to pay to, split or rebate any commission, fee or valuable consideration, directly or indirectly, with any person who is not a duly licensed practitioner or to cooperate, assist or endorse any transaction or engagement of his services in violation of any existing law, rule or regulation; (f) He should indicate the license number of the Certificate issued by the Department of Trade and Industry in his letterhead, dry seal, signboard, billboard, advertisement or other announcement in relation to the Realty Service Practice; SECTION 2- Relation to the Public (a) The practitioner should be imbued with a social conscience for he does not live by himself and his family alone but he is a part of society with definite social responsibilities. (b) He should ensure the highest and the best use of the land and the equitable distribution of ownership, irrespective of political beliefs, cultural background, sect religion or class; (c) He should keep himself well informed as to any movement affecting real estate in his community, city or province, so that he may be able to contribute to the public thinking on matters of taxation, land use, city planning, zonificaton and other programs of the government; (d) He should cooperate with the government in protecting the public against deceptive, unfair and unconscionable acts and practices of some unscrupulous or unlicensed practitioners, like fraud, misrepresentation, concealment of relevant information and other related unethical practices; (e) He ascertain all pertinent facts concerning every property, and avoid error, exaggeration, misrepresentation, concealment of pertinent facts in dealing with the general public concerning real estate transactions; (f) He should not be instrumental in introducing in a neighborhood a certain character or use of property which will tend to impair or erode property values within that neighborhood; (g) He should not be a party to the naming of a false consideration in deed of instrument; (h) He should keep a special bank account separate and distinct from his own funds, all moneys received in trust for other persons, such as deposit in escrow, trust funds, clients earnest money and similar items; (i) In his advertisements, brochures or announcements, he should present a true picture of the property, its improvements, or rights and interests therein including whatever liens or encumbrances it may have, if any, and should indicate his name, firm name, address and license number of the Certificate issued by the Department of Trade and Industry. In case of real estate salesman, he should indicate the name, firm name and license number of the broker under whom he is employed; (j) He should see to it that all agreement, terms and conditions, financial obligations and commitments in a real estate transaction are in writing, duly signed by all parties concerned, and if necessary to be properly authenticated by a Notary Public. SECTION 3 - Relation to the Client Customer (a) T he practitioner, in accepting an appointment or Authority to act for and in behalf of a client or customer, should pledge himself with utmost fidelity and good faith to protect and promote the interest of his client without in any manner sacrificing the legitimate interest of the other party in the transaction; (b) For the sake of justice and fairness to his client who have reposed confidence in him, the Practitioner should endeavor to be well informed of current legislation, policies and programs of the government including proposed legislation, which may affect the interest of his client; 24

(c) He should not accept any commission, fee or any valuable consideration from any party in any transaction except from his client unless with the full knowledge and consent of all the parties in the transaction. He shall not also introduce or work for an overprice from either the buyer or seller except the usual standard rate of commission on any real estate transaction; (d) He should charge or collect only such fees or commissions as are fair and reasonable in accordance with usual schedule of commission for Metro Manila and provinces; (e) He should not advertise any property without authority and in any offering, the price quoted should be in accordance with the price agreed with the owners as the offering price. (f) In the event that more than one formal offer on a specific property is made before the owner has accepted a proposal, all written offers should be presented to the owner for his decision; (g) He should endeavor to make his client and customer concludes a fair contract advantageous to both; (h) He should assist his customer acquire possession and ownership of the real property bought in accordance with the terms and conditions agreed upon; (i) In case he is called upon to act as witness in a court proceeding he should give his testimonies in the most unbiased, honest, truthful, and professional manner; (j) As a real estate appraiser, he should not render an pinion without careful and thorough analysis and interpretation of all factors affecting the value of the property. His counsel and advice constitutes a professional service for which he should make a fair and reasonable charge; (k) As an agreement, he should not undertake to make an appraisal or render an opinion that is outside the field of his experience and competence unless he obtains the assistance of another practitioner familiar with such type of property or unless the facts are fully disclosed by the client. SECTION 4- Relations to Fellow Practitioners (a) He should not solicit a listing which is currently listed exclusively with another broker unless the listing agreement has expired or revoked by the owner and the owner offers to list the same to the new broker without soliciting the same; (b) When he accepts a listing from another broker, the agency of the broker who offers the listing should be respected until it has expired and the property has come to the attention of the accepting broker from a different source, or until the owner without solicitation, offers to list with the accepting broker. Such a listing should not be passed to a third broker or published in a daily newspaper without the knowledge and consent of the listing broker; (c) Signs giving notice of a property for sale, rent, lease or exchange should not be placed on any property by more than one broker and only if authorized by the owner; (d) He should not use information obtained by him from a listing broker through offers to cooperate or received through multiple listing services or other sources authorized by the listing broker for the purpose for creating a referral prospect to a third broker or for creating a buyer's prospect, unless such is authorized by the listing broker; (e) He should cooperate with other brokers on property listed and share the commission on an agreed basis. Negotiations concerning property listed exclusively with one broker should be carried with the listing broker, and not the owner, except with the consent of the listing broker; (f) He should not solicit or use the services of an employee or salesman of another practitioner without the knowledge of the employer; (g) He should not criticize publicly a competitor nor volunteer an opinion of a competitor's transaction. If his opinion is sought, it should be rendered with professional integrity and courtesy; (h) The practitioners should seek no fair advantage over his fellow practitioners. In the event of a controversy between practitioners belonging to the same organization or association, such controversy should be submitted for arbitration to such organization or association whose decision, if accepted by both parties, will be final and binding as far as the association is concerned. (j) If the controversy is between practitioners belonging to different organizations or associations, it should be submitted to an Arbitration Board considering of one member from each organization or association chosen by each of the parties to the controversy. A third member should be chosen from either the organizations or association or from the national organization or association is affiliated. (k) In case the practitioners in a controversy are not members of any duly recognized organization or the Arbitration Boards cannot settle the controversy, the Department of Trade and Industry shall assume jurisdiction over said controversy; 25

(f) In case a complaint is filed against a practitioner with his organization or association for unethical or unfair practice, he should voluntarily submit all pertinent facts before an investigating body that may be informed by his organization or association for evaluation and resolution.

SECTION 5 -Relation to his Organization Including the National Association to which his Organization is Affiliated (a) In the interest of society and his own profession, calling or occupation, the practitioner should abide by the Constitution and By-Laws of his association or organization and the National Association to which it is affiliated; (b) Election as officer or member of the governing body of the organization or association carries with it the moral obligation to serve honorably, unselfishly, diligently and efficiently. It should not be subject of the election campaign or use of letters or circulars announcing one's candidacy or appealing for votes for himself or for other nominees or candidates or other forms of electioneering or any agreement or any act which will interfere with the free and wise choice of the officers and members of governing body of the organization; (c) He should support his organization morally and financially and actively support its plans, programs and projects for the benefit of all the members of the organization or association; (d) Any practitioner should first exhaust all administrative remedies available under existing laws, rules and regulations before taking any judicial or quasi-judicial action. ARTICLE IV.SANCTIONS Violations of any provision of this Code shall give rise to any sanction that may be imposed by the organization to which the practitioner belongs as a member, without prejudice, however, to such disciplinary action that the Department of Trade and Industry may deem expedient thereon when the proper complaint against the erring practitioner for alleged misconduct is filed with the Department in accordance with existing laws and regulations. In the case of practitioners who are not members of any organization , any complaint against them shall be governed by the existing laws, rules and regulations governing controversies. ARTICLE V. EFFECTIVITY This code shall take effect immediately. Done in Makati, Metro Manila, this 29th day of September, 1993 (SGD) RIZALINO S. NAVARRO Secretary, Department of Trade and Industry

26

PRINCIPLES AND PRACTICE OF REAL ESTATE INTRODUCTION: What is the basis for real estate brokerage? What constitutes real estate brokerage? How does one engage in real estate practice In the Philippines? Real estate brokerage represents a combination of the principal of the law of contract. A real estate broker is an agent in the fullest sense of the word, in the he represents another (the owner) from whom he has derived his authority. The interests of three people are involved in a real estate transaction: the owner the broker and the purchaser, with whom the broker negotiates in the interests of the owner A. General Definations 1, “Real estate broker – any person who for another person and another person and a fee, commission or other valuable consideration, or with the intention or with the expectation of upon the promise of receiving or collecting a free, commission or other valuable consideration, does any of the following: sells, exchanges, purchases, rents or leases, or negotiate the sale exchange, purchase, rental or leasing of any real estate, or list or offer, attempts or agrees to list any real estate agrees to list any real estate or buy, sells or offers to sell or otherwise deals in options on real estate, or advertises or holds himself out as engaged in the business of selling, exchange, purchasing, renting or leasing real estate, or assist or prospects or the negotiation or completion of any agreement or transaction which result in sale, exchange, purchase. leasing or renting of any real estate. 2. “ Real estate salesman “ An individual who performs any act or engages in any transaction include in the forgoing definition of a broker, except the completion of the negotiation of any agreement or transaction which results or intended to results in the sale, exchange, purchase, renting or leasing of any real estate. 3. “ Agent “ – One who represents the interests of another (the principal, i.e. client or real estate broker) 4. “Principal” –commonly known as the person who engages the agent for representation. 5. “Client” – A person who empower another to act as his or her representative or agent. Client relationship fiduciary relation. 6.”Customer” – Generally refers to a person without representation involved in the transaction. All agents have a duty to treat costumers fairly. B. Real estate Brokerage as a Contract of Agency 1. Definition by the contract of agency, a person binds himself to render some service or to something in representation or on behalf of another, with the consent or authority of the latter. (Art.1868 CCP) 2. How The Agency Relationship is Created. There are three basic ways an agency may be created; appointment; estoppel or Ratification a. Appointment means that the principal gives express authorization to the agent. under both common and statutory law, this requires a writing when the sale of real estate is involved. b. Estoppel means that if the principal causes third persons to believe that someone is his agent and that third party deals with the agent, then the principal cannot deny the agency relationship even though it did not exist in fact. c. Ratification means that if a person having no authority an agent and the purported principal later adopts the acts of that agent, an agency relationship has retroactively been created. 3. Power of An Agent. An agent has the powers which are conferred upon him by the principal. In addition, the agent has such powers as are necessary, proper, or usual to enable him to accomplish the purpose of the agency. The powers granted to an agent may be restricted by contract or by statute. 4. Duties of an agent a. Obedience – agent must carry out all lawful interest of the client. It also requires that the agent refrain from competing with the client in any way or in making any secret profits in connection with the agency. 27

b. Loyalty – agent must act in the best interest of the client. It also requires that the agent refrain from competing with the client in any way or in making any secret profits in connection with the agency c. Disclosure - Of all information which is relevant to client. The fiduciary relationship imposes the affirmative duty on the agent to give advice on the subject matter of the subject matter of the agency, to disclose all relevant information affecting the subject matter of agency, and to keep the principal”s affairs confidential. As such an agent cannot represent both parties to a transaction (dual agency) unless there is full and complete disclosure, including advising the principal as to the consequences of the dual agency. d. Confidentiality – duty to keep confidential client”s information or discussion. Duty survives termination of agency relationship. ,Duty does not apply to legally required disclosures such as known physical hazardous conditions of property. e. Accountability – agent must protect and account for all money, documents. Or other personal property given to him by the client. f. Reasonable Care & Due Diligence - agent must act competently, capable of performing duties with scope of license requirements. An agent must use reasonable skill, care, and diligence in all that he does under his authority as an agent. 5. Liabilities of Principal The principal is liable for the actions of his agent under the doctrine of respondent superior. The knowledge of an agent is imputed to the principal and the principal is deemed to knowledge imputed to the principal includes relevant knowledge received prior to the commencement of the agency. Torts committed by agents such as negligence and fraud are also attributed to the principal. 6. Liabilities of the agent An agent is liable to his principal for any violation f his duties imposed upon him by virtue of the agency may also be liable to a third party for his acts that have been directed towards that third party. 7. Real Estate Broker”s Listing as an Agency a. Listing contract : is an agreement between the brokers and the owner of real property whereby the owner authorizes the broker to negotiate for the sale, lease, join venture, exchange, or mortgage of his or her real property for a commission or any valuable consideration. b. Contents of a listing Contract  Date of the authority  Name and address of the broker, license number  Function to be performed or service to be rendered by the broker  Type of listing  Description of the property: to include location, kind title, area of land and improvement, if any, utilities included, if any liens and encumbrances, if any.  Price and terms  Duration of the authority Note: “Hold – over” clause: is a  Provision in the listing contract which entitles the broker to a commission even though if the sale is consummated after the period of his authority provided that the buyer has been registered by him the owner/ seller during the period of his authority.  Commission or compensation of the broker and terms of payment  Name address and signature of the owner / seller  Acceptable by the broker 8. Types of Agency / Listing a. As to forms : Oral or written ( when the law specifically requires in some instances ,e ,g . sale of real property through an agent or attorney in fact whose authority must be in writing ) (Art. 1869 & 1874,CCP) b. As to Exclusiveness:  Open or Non-exclusive: the authority is given to any broker  Multiple: the Authority given to one member of the board or association of broker is given automatically to all the other members. Some real estate boards or chapter’s of broker associations operate a multiple service (MLS) Under this system, each member receives all listing of property given to every other member of the multi-service. Under the rules of the multi-list association, the listing broker receives a percentage of the commission if the listed property is sold by another broker member, and the selling broker receives a higher percentage of the commission. The multi- list association receives an over-riding small percentage of the commission to defray its expenses.  Exclusive agency: the authority is given to only one broker with the exclusion of all, except that when the owner himself or herself successfully transacts the property, the broker is not entitled to the commission. This is better kind of listing for the broker.  Exclusive Right to sell: the authority is given to only one broker with the exclusion of all; even if the owner sells or leases the property, the broker is entitled to the commission. This is the best kind of listing for the broker.  28

c. As to Function  Sales agency : listing authority where the primary object is to sell  Purchase agency: listing authority where the primary object is to buy a property  Lease agency : listing authority where the primary object is to lease or find property for lease  Exchange agency: listing authority where the primary object is to exchange one property with another.  Loan agency : listing authority where the primary object is to secure a loan  Sub-agency: between the broker and salesman.  Joint venture agreement d. As to the basis of commission:  Percentage listing: one where the commission is a percentage based on the selling price  Net listing one where the commission is not include in the selling price, hence overprice 9. Termination of Agency Relationship a. Expiration of agreement b. Death or insanity of agent or client principal c. Withdrawal / Repudiation either principal or agent with draw consent; the court may deem this a breach of fiduciary obligation and the breaching party may be held liable for damages. d. Accomplishment : completion of the performance under agreement e. Revocation : mutual agreement to terminate or rescission f. Dissolution : in capacity ( i. e. mentally incapable or bankruptcy or either party g. Impossibility of performance ( i. e. ) destruction of property C. Real Estate Brokerage as a practice 1. Getting started in real estate brokerage a. Secure your license b. Register as Sole Proprietorship, Partnership, or Corporation c. Business Permit from a Local Government Unit where you will hold office d. Register with the BIR (TIN, VAT) e. Set up office 2. Securing Listing: the process of soliciting authority to sell, lease, joint venture, etc. over properties fom owners. a. Decide whether to go into general brokerage, project selling (developer based), or a combination of both. The trend now is to focus on a particular market or a specific geographical location. b. Kinds of Properties to choose from: Rawland, Residential Lots or House and Lots, Commercial Properties, Industrial Properties, Condominium, Leisure Properties, and Memorial Lots. c. As to kind of transaction: sale, lease, joint venture, packaging projects, syndication. d. Learn some negotiating techniques for getting of listing. e. Manage your listing: manual or use of information technology. f. Source of Listing: Relatives, friends, neighborhood associations, civic organizations, Fellow Brokers, Realty Associations, Banks, Real Estate Developers, and Newspaper Ads. 3. Marketing of listing a. Prospecting generating leads for customers, b. Qualifying: evaluating the capacity, need, and urgency of the customer c. Presenting: making presentation of possible & suitable property for the qualified costumer. d. Tripping: bringing the customer to the site of the property being offered. e. Negotiating: bringing the client and the customer into an agreement. f. Closing: leading the customer and the client to finally sign a contract and make payment. g. Completing the transaction h. Documenting & registering 4. What can the Real Estate Practitioners, do to surpass Real estate consumer expectations and satisfaction? Consumers today have the information and will personally discount the amount effort and level of service they see the real estate practitioner offer. The practitioner will be delivering quality service. they will do this by adding value to the home-buying and hoi\me-selling transaction. The practitioner will add value in at least five ways. First, the real estate professional will be sorting through information that is available and giving the consumer quality information that more closely meet the needs of that particular consumer. There is no much consumer that the consumer is information is starting to get overwhelmed. Information will be increasingly available in the future. The astute real estate professional will assist the consumer by “qualifying” the consumer’s needs and then helping them find or giving them the information that meets those needs, Real estate Professionals used to have to qualify the buyers / sellers needs in buying or selling the home. When they were assisting the buyer, they also had to assess the consumer’s purchasing power. The real estate professional’s job is still the same, but now it also includes giving consumers the information that meets their needs and helping them find the information that is most pertinent to their needs, the practitioner of today and tomorrow will be a buffer around all this information and save the consumer the time, effort and frustrations associated with sorting through all this information... 29

Second, the real estate professional will be interpreting and integrating the information. In other words, the real estate professional will turn information into usable knowledge; consumers can get the information on their own. Unless the consumers have been through the home-buying process numerous what all that information mean. The real estate professional should not allow the consumer or the availability of all these information to intimidate them. Take the opportunity to show the consumers how can use this information in ways beyond their thoughts. You will add value to the relationship by demonstrating your expertise, consumers who value information especially value someone who can effectively and efficiently use that information, these consumers will more highly value knowledgeable real estate professional. Third, the real estate professional will be adding to this knowledge by showing "wisdom" about the marketplace, the property, the real estate transaction, etc. Wisdom occurs when someone shows significant insight beyond the information. Effectively identify the buyers'/sellers' needs above and beyond consumers' awareness of their needs, and then use that information in their home-buying and home-selling experience. For example, note that the buyer really wants a low maintenance property, even though his or her past property was far from maintenance free. Show the consumer the pros and cons of certain information you have or he or she has available that relates to that newly realized need. This is "wisdom." This is the value added service. Fourth, the real estate professional will give true quality service. This means speedily meeting the needs of consumer and keeping in contact with the consumer throughout the entire transaction and after the transaction, etc. Also, the real estate professional will do things that keep the home-buyer and eventual seller emotionally attached to that particular real estate professional. As people move less often and realized that they do not need a real estate professional to help them stay where they're at, it will become increasingly important to capture those who do not move or people they know in their circles that will be moving. Follow-up mechanisms will need to be put in place to effectively meet these needs. Fifth, the real estate professional in the future will need to offer the consumer all the services the consumer is interested in. A "shopping" list of quality services offered by the brokerage or the agent can be given to the home buyer or seller. Let consumers choose their interests. Because most agents do not like to deal with these ancillary services, it makes sense that brokers offer to service the real estate agent's client/customer on this dimension. The real estate broker of the future will have greater services expected of them by the more knowledge and demanding consumer. To effectively compete in the marketplace, real estate professionals should consider being more flexible change, being better listeners and being quicker learners.

30

Legal Aspects of Real Estate

 Fundamentals of Land Ownership  Sales, Leases and Mortgage  Documentation and Registration  The Family Code and the Real Estate Broker  The Comprehensive Agrarian Reform Program (CARP)

31

FUNDAMENTALS OF LAND OWNERSHIP REGALIAN DOCTRINE All Lands of the public domain belong to the state. "All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands and all other natural resources shall not be alienated. The exploration development and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. x x x" [Sec. 2. Art. XII] I. RIGHT TO OWN LAND The right to own real estate in the Philippines is governed by: A. Constitution [1987 Philippine Constitution] and Art.XII. Sec. 3. Philippine citizenship may be lost or reacquired in the manner provided by law. Art. XII. Sec.4. Citizens of the Philippines who marry aliens shall retain their citizenship, unless by their act or omission they are deemed, under by law, to have renounced it. Art.XII. Sec.7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations or associations qualified to acquire or hold lands of the public domain. Art. XII. Sec.8. Notwithstanding the provisions of Section 7 of the article, a natural- born citizen of the Philippine citizenship may be transferee of private lands, subject to limitations provided by law. B. Other Special or Pertinent Laws II. LANDS OF THE PUBLIC DOMAIN 1. Lands of the public domain are classified into: (1) agricultural, (2) forest or timber, (3) mineral, and (4) national parks. 2. Alienable lands of the public domain shall be limited to agricultural lands. 3. Private corporations and associations may hold such alienable lands of the public domain only by lease,for a period not exceeding 25 years, renewable for not more than 25 years, and not to exceed 1,000 has. 4. Filipino citizens may lease not more than 500 hectares, or acquire not more than 12 hectares by purchase, homestead, or grant. III. STEWARD CONCEPT OF OWNERSHIP Ownership carries with it a distinct social obligation. As stewards of their land, owners are obliged to use their properties to promote not only their properties to promote not only their interest but also the general welfare. When a person's landholdings exceed the requirements of his needs, or their utilization is not conducive to general welfare, the state may exercise its power to regulate and control ownership. IV. BUNDLE OF RIGHTS THEORY This refers to the rights or attributes which are inherent in, or appurtenant to ownership, and include the rights. to possess to use, BUNDLE to the fruits, OF to dispose, and RIGHTS to recover V. RESTRICTIONS OR LIMITATIONS TO BUNDLE OF RIGHTS 1. Government or Legal: a. Zoning - refers to use restrictions in particular areas or the delineation of allowable uses in particular areas. b. Subdivision Regulations - requirements which must be complied within subdivision specifications, etc., c. Police Power - the power of the state to regulate the use of the property d. Building Code - regulations pertaining to specifications such as height, setbacks e. Eminent Domain - the power of the State to take the private property for public use upon payment of just compensation. f. Escheat - the reversion of the State to take private property for public use upon payment of just compensation. 32

g. Taxation - power of the State to impose and collect tax and other charges. 2. Contractual or Voluntary: a. Lease Contract - the temporary surrender of the right to possess, use and enjoy in favor of person who pays a consideration. b. Right of Way Easement - the right given to an owner of an adjoining land to pass or have access thru another land. c. Usufruct - conveyance of the right to enjoy the fruits of the property. d. Use Restrictions in Subdivision Contract VI. ESTATE AND REAL ESTATE Estate - refers to the totality of the assets owned by a person which includes real estate and personal properties. Real State - refers to the land and all permanent improvements thereon. VII. CONCEPT OF TITLE "TITLE" is not synonymous with the Torrens Certificate of Title. It is a term which means evidence or proof of ownership, such as tax declaration, realty tax receipts, deed of sales, and Torrens Certificate of Title. The best evidence of ownership of title is the Torrens Certificate of Title because it is imprescriptible and indefeasible. A person is deemed to have title to a property when he can exercise or has the bundle of rights over it. VIII. MODES OF ACQUIRING TITLE 1. Private Grant - voluntary transfer or conveyance such as sale or transfer. 2. Public Grant - acquisition of alienable public land by homestead patent, free patent, sales patent or other government award. 3. Involuntary Grant - acquisition against consent of owner, such as foreclosure or executive sale. 4. Inheritance - acquisition by hereditary succession. 5. Reclamation - filling of submerged land subject to government regulations and existing laws 6. Accretion - acquisition of land adjoining banks of rivers due to gradual deposit of soil. 7. Prescription - acquisition of title by actual, open continuous and uninterrupted possession for a period of time under claim of title. - Ten (10) years in good faith and - Thirty (30) years if in bad faith. IX. GENERAL RULE ON OWNERSHIP OF LAND 1. Only Filipino citizens 1. By birth 2. Naturalization Process 3. Act of Congress 4. Repatriation 5. Dual Citizenship 2. Corporations or partnership at least 60% of the capital of which is owned by Filipinos are entitled to acquire land in the Philippines. NOTE: FOREIGN OWNERSHIP OF HOUSE/IMPROVEMENTS A foreigner may own a house and improvements, which may be constructed on the land owned by a Filipino [e.g. under lease] EXCEPTIONS 1. As exceptions to the general cases to the rule, alien acquisition of real estate in the Philippines is allowed in the following cases. a) Acquisition before the 1935 Constitution; b) Acquisition by hereditary succession [LEGAL HEIR] ; c) Purchase by aliens of not more than 40% of the units in a condominium project; d) Purchase by former natural-born Filipino citizens, subject to the by law requirements or limitations prescribed. Under Batas Pambansa Bilang 185 (B.P. 185) aa) Acquisition shall not exceed - 1,000 square meters for urban land or - 1 hectare for rural land to be used solely for residence of the buyer WHAT IS URBAN LAND? Urban land shall refer to land located in an urban area. The urban areas shall include: (1) In their entirety, all municipal jurisdictions which, whether designated or not as chartered cities, provisional capitals, have population density of at least 1,000 persons per square kilometer; 33

(2)

Poblaciones or central districts of municipalities and cities which have a population density of at least 500 persons per square kilometer; (3) Poblaciones or central districts (not included in 1 and 2 above) regardless of population size which have the following: (a) A street pattern, i.e., a network of streets in either at parallel or right angle orientation; and (b) At least six establishments (commercial, manufacturing, recreational and/ or personal services); and (c) At least three of the following: 1. A town hall, church or chapel with religious services at least once a month; 2. A public plaza or cemetery; 3. A market place or building where trading activities are carried on at least once a week; and 4. A public building like a school, hospital, puericulture and health center or library. (d) Barangays having at least 1,000 inhabitants which meet the conditions set forth in the preceding subparagraph [sub-par. (3)] and in which the occupation of the inhabitants is predominantly other than farming or fishing. Rural lands shall refer to land located in a rural area. The rural areas shall refer to all the areas of the Philippines which do not meet the conditions set forth in the definition of urban areas in the immediately preceding paragraph (par. 3) of this Section. (Sec. 1. IRR. BP 185) bb) In case of married couples, one or both of them may avail of the privilege provided that the total area shall not exceed the maximum limit. cc) When the transferee already owns urban or rural lands for residential purpose, he shall be entitled to acquire additional urban or rural land for residential purpose which, when added to those already owned by him shall not exceed maximum area allowed by law. BP 185: Mechanics for registration of transfer No deed of conveyance in favor of a transferee under Batas Pambansa Blg. 185 shall be registered by the Register of Deeds unless accompanied by a sworn statement showing the; 1. date and place of the transferee's birth; 2. names and addresses of his parents, of his spouse and children if any; 3. area, location and mode of acquisition of his landholdings in the Philippines if any; 4. his intention to reside permanently in the Philippines; 5. date he lost his Philippine citizenship, and 6. country of which he is presently a citizen. The sworn statement herein above mentioned shall be in addition to the documentary requirements prescribed as prerequisites for the registration of titles under existing law and regulation. (Sec.4, IRR. BP 185) Under Foreign Investments Act of 1991 e) Any natural born citizen who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private land. aa) up to a maximum area of five thousand (5,000) square meters in the case of urban land or 3 hectares in the case of rural land to be used by him for business or other purposes. bb) In the case of married couples, one of them may avail of the privilege herein granted: provided that if both shall avail of the same, the total area acquired shall not exceed the maximum herein fixed. cc) In the case of the transferee already owns urban or rural land for business or other purposes, he shall still be entitled to be a transferee of additional urban or rural land for business or other purposes which when added to those already owned by him shall not exceed the maximum areas herein authorized. dd) A transferee under this Act may acquire not more than two (2) lots which should be situated in different municipalities or cities anywhere in the Philippines: Provided. That the total land area thereof shall not exceed - five thousand (5,000) square meters in the case of urban land or - three (3) hectares in the case of rural land - for use by him for business or other purposes. A transferee who has already acquired urban land shall be disqualified from acquiring rural land and vice versa".(Sec.10. RA 7042 as amended by R.A 8179. Approved March 28,1996) IMPLEMENTING RULES AND REGULATIONS OF RA 7042 (As amended by Republic Act No.8179) SECTION 5. Land acquired under this Act shall be primarily, directly and actually used by the transferee in the performance or conduct of his business or commercial activities in the broad areas of 1. agriculture 2. industry and 34

3. services, 4. including the lease of land. but excluding the buying and selling thereof. A transferee shall use his land to engage in activities that are not included in Negative List or in those areas wherein investment rights have been granted to him under this Act. 2. A Filipina who married an alien retains her Philippine Citizenship (unless by her act or omission she is deemed under the laws to have renounced her Philippine Citizenship) and may therefore acquire real estate in the Philippines. 3. A former natural-born citizen of the Philippines who became of another country and reacquires Filipino citizenship under R.A. No. 9225(Dual Citizenship Law).

d. DUAL CITIZENSHIP LAW [REPUBLIC ACT NO. 9225] AN ACT MAKING THE CITIZENSHIP OF PHILIPPINE CITIZENS WHO ACQUIRE FOREIGN CITIZENSHIP PERMANENT, AMENDING FOR THE PURPOSE COMMONWEALTH ACT NO. 63 AS AMENDED, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: SECTION1. Short Title - This Act shall be known as the "Citizenship Retention and Re-acquisition Act of 2003." SEC.2.Declaration of Policy - It is hereby declared the policy of the state that all Philippine citizens who become citizens of another country shall be deemed not to have lost their Philippine citizenship under the conditions of this Act. SEC.3. RETENTION OF PHILIPPINE CITIZENSHIP - Any provision of law to contrary notwithstanding, natural-born citizens of the Philippines who have lost their Philippine citizenship by reason of their naturalization as citizens of a foreign country hereby deemed to have reacquired Philippine citizenship upon taking the following oath of allegiance to the Republic: "I , solemnly swear (or affirm) that I will support and depend the Constitution of the Republic of the Philippines and obey the laws and legal orders promulgated by the duly constituted authorities of the Philippines: and I hereby declare that I recognize and accept the supreme authority of the Philippines and will maintain true faith and allegiance thereto; and that I impose this obligation upon myself voluntarily without mental reservation or purpose of evasion." Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens of a foreign country shall retain their Philippine citizenship upon taking the aforesaid oath. SEC. 4 Derivative Citizenship - The unmarried child, whether legitimate or adopted, below 18 years of age, of those who re-acquire Philippine citizenship upon effectivity of this Act shall be deemed citizens of the Philippines. SEC. 5 Civil and Political Rights and Liabilities - Those who retain or reacquire Philippine citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant liabilities and responsibilities under existing laws of the Philippines and the following conditions: (1) Those intending to exercise their right of suffrage must meet the requirements under Sec.1,Article V of the Constitution, Republic Act No. 9189, otherwise known as the, "The Overseas Absentee Voting Act of2003".and other existing laws. (2) Those seeking elective public office in the Philippines shall meet the qualifications for holding such public office as required by the Constitution and existing laws, and at the time of the filing of the certificate of candidacy, make a personal and sworn renunciation of any and all the foreign citizenship before any public authorized to administer an oath; (3) Those appointed to any public office shall subscribe and swear to an oath of allegiance to the Republic of the Philippines and its duly constituted authorities prior to their assumption of office: Provided, that they renounce their oath of allegiance to the country where they took that oath; (4) Those intending to practice their profession in the Philippines shall apply with the proper authority for a license or permit to engage in such practice; and (5) That right to vote or be elected or appointed to any public office in the Philippines cannot be exercised by, or extended to, those who: 35

(a)

Are candidates for or are occupying any public office in the country of which they are naturalized citizens; and/or (b) Are in active service as commissioned or non-commissioned officers in the armed forces of the country which they are naturalized citizens. SEC.6. Separability Clause - If any section or provision of this Act is held unconstitutional or invalid, any other or provision not affected thereby shall remain valid and effective. SEC. 7. Repealing Clause - All laws, decrees, orders, rules and regulations inconsistent with the provisions of this Act are hereby repealed or modified accordingly. SEC.8. Effectivity Clause. - This Act shall take effect after fifteen (15) days following its publication in the Official Gazette or two newspapers of general circulation.

Approved. EFFECTIVITY : SEPTEMBER 18, 2003 PUBLICATION : SEPTEMBER 2, 2003 (Manila Times and Today) APPROVED BY GMA : AUGUST 29, 2003 X. PROPERTY ACQUISITION AND THE AFFIDAVIT OF WAIVER REPUBLIKA NG PILIPINAS KAGAWARAN NG KATARUNGAN PANGASIWAAN SA PATALAAN NG LUPAIN (LAND REGISTRATION AUTHORITY) East Avenue cor. NIA Road Quezon City In RE: Consulta REGISTRAR of DEEDS FOR PUERTO PRINCESA CITY, Petitioner.

CONSULTA No. 3543 CONSULTA No. 3554

X***********************X

RESOLUTION May a Filipina who contracted marriage with an alien husband after the passage of the Family Code and has acquired real property in the Philippines through a Deed of Absolute Sale register the same in her own exclusive name? This is the very issue that this consulta seeks to resolve. The instant case actually involves two m0nths (2) consultas. These consultas were consolidated considering they were mistakenly docketed separately, they actually involve the same issues, the same set of documents sought to be registered, the same property and the same parties. From the records of case, the facts are as follows: On April 27, 1999,Nelly Rodriguez, A Filipino citizen, and Estratios N. Varsamos, a Greek national got married without an ante-nuptial agreement at the Greek Embassy in the country of Abu Dhabi. That, sometime in July 4, 2002,Nelly Rodriguez-Versamos bought a parcel of land described as Lot No. 3787 of Pls - 1117-D with an area of 30,355 sq. m. located at Brgy Luzvminda, Puerto Princesa City, covered by OCT No. 568 issued by the Register of Deeds of Puerto Princesa City. The Deed of Absolute Sale executed by the registered owner, Joseph Ibanez Genon dated July 4, 2002 in favor herein petitioner, was presented for registration to the Register of Deeds who however entertained doubts as to its registrability in view of Consulta No. 2738 promulgated on June 30,2000,wherein this Authority ruled against the registration of a sale in favor of a Filipina who is married to a foreigner on the ground that, under the Family Code, in the absence of an agreed property regime, the spouses are deemed to have adopted an absolute community property regime. Under this system, which supposedly makes the foreigner spouse a co-owner of real property acquired by the Filipino spouse, the constitutional fiat prohibiting aliens from acquiring lands in the Philippines should apply. Hence, this Consulta. The seeming complication was brought about by the advent of Article 93 of the Family Code which pertinently provides that; Art. 93.

Property acquired during the marriage is presumed to belong to the community, unless it is proved that it one of those excluded therefrom.

From the aforequoted provision of law, it is clear that under the regime of absolute community, all properties acquired during marriage are presumed to belong to the community. Pescinding from the basic principle. It is axiomatic, that all properties acquired by either spouse during the existence of that absolute community, shall be 36

presumed to be co-owned by both spouses, such that a foreigner husband married to a Filipina wife shall be a coowner with respect to that property. That presumption of co-ownership is however merely created by fiction law. As a matter of fact, Article 90 of the Family Code even provides that: "The provision on co-ownership shall apply to the absolute community of property between the spouses in all matters not provided in this Chapter". However, that "[T]he partnership having been created by law, it has no object and it is unsafe to extend it on pretext of tacit consent."(Gutierrez, 3d Ed., vol. 1,p. 579, cited in Nable Jose,41 Phil. 713) "Which means that either of the spouses holds merely an inchoate right over the co-owned property, a mere right of expectancy, because of it will be discovered during the liquidation of the marriage that there is no absolute community property to be divided, there will be no share for either husband or the wife" (supra). Moreover, as Article 93 of the family Code further provides, the presumption of co-ownership of properties acquired during the existence of the absolute community is a rebuttable one, "unless it is proved that it is one of those (properties) excluded there from." Thus, if a Filipina spouse buys a certain real property in the Philippines under her name she acquired the same in her personal individual capacity and intends to put the same under her individual name, not under the legal fiction of the Absolute community. Stated otherwise, her marriage to an alien spouse merely created a legal presumption of co-ownership which will not in anyway deprive her of her right to acquire real properties in the Philippines in her own right. A natural born citizen's right to acquire real property is a basic right enshrined in the constitution. In this regard, the interplay of four (4) basic constitutional provisions should be enlightening, thus: Art.XII. Sec.3. Philippine citizenship may be lost or reacquired in the manner provided by law. Art.XII. Sec.4. Citizens of the Philippines who marry aliens shall retain their citizenship, unless by their act or omission they are deemed, under the law, to have renounced it. Art.XII. Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations or associations qualified to acquire or hold lands of the public domain Art.XII.Sec.8. Notwithstanding the provisions of Sec.7 of this article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be transferee of private lands, subject to limitations provided by law. Certainly in the case at bar, there is no showing that the registrant Filipina spouse is not qualified to own real property in the Philippines nor it is shown that she possesses any of the disqualification. The fact that she married a Greek husband does not automatically make her Greek. The Constitution requires a positive act of renunciation of citizenship, i.e, by naturalization in a foreign state or by taking an oath of allegiance to a foreign country, before a Filipino citizen may lose his citizenship. None of these conditions are obtaining in the instant case. Applying now these constitutional provisions in relation to the provisions in the relation to the Family Code provision cited above, it goes without saying that if we deny registration of a Deed of Sale of land in favor of the Filipina spouse by mere reason that it shall ultimately redound to the benefit of the absolute community which as discussed earlier, is a mere legal fiction of co-ownership. Certainly this is an absurd spectacle. A regime of absolute community of property has no citizenship. This is not within preview of the constitutional prohibition against aliens owning lands in the Philippines. We should not be confused that here, it is the Filipina wife who is buying the land and not the absolute community regime. It is so fundamental in our jurisdiction that a mere statutory provision of law cannot constrict, delimit or otherwise expand a basic constitutional principle. To deny the Filipina wife the registration of her Deed of Sale is a direct affront on her basic constitutional right as it will unnecessarily constrict and unjustly deprive her of her right to own lands in the Philippines. The Family Code cannot prevail over the constitution in view of the basic principle in law that the Constitution, being the supreme law of the land, all other laws must be subordinate to it. In addition, the denial of registration of a Deed of Sale of land in favor of the Filipina spouse married to a foreigner is a great inequity which evens the Constitution looks upon with disfavor. In this regard, it is apropos to mention Section 8 &Art.XII of the Constitution, which provides that even natural born Filipino citizen who has lost his/her citizenship may still acquire lands or be a transferee of private lands in the Philippines, subject to limitations provided by law. A still valid law - Batas Pambansa Bilang 185- implements the constitutional provision as it allows a former Filipino citizen who has lost and or renounced his Filipino citizenship, to be a transferee of private land in the Philippines, subject to certain limitations. Applying the statutory provision in the case at bar, we will be placing the Filipina registrant who has not lost her citizenship nor renounced her Filipino citizenship at a rather iniquitous and lesser standing if we deny registration of her title. The Authority is not unaware in the past, it has accepted practice that before a Filipino a wife married to an alien husband registers a real property under her name , the Registrar of Deeds, as a matter of pre-requisite, requires that an "Affidavit of Waiver of Rights" executed by the foreigner spouse must also be presented. This authority finds that such requirement finds no basis in law as it directly collides with Article 89 of the Family Code which provides that "no waiver of rights, interests, shares and effects of the absolute community of property during the marriage can be made except in judicial separation property" or "after the marriage has been dissolved or annulled". This provision precisely applies to voluntary waiver, the reason being to avoid undue influence between the spouses, and does not, therefore, affect judicial transfers. Thus, in the light of the foregoing ratiocination, we opine that the requirement of such "Affidavit of the Waiver of Rights" has become a mere surplus age as it serves no useful purpose, other than being void. WHEREFORE, in view hereof, this Authority rules and so holds that the Deed OF Absolute Sale covering transfer of lot No. 3787, Pls-1117D with an area if 20,355 sq. m. located at Luzvminda, Puerto Princesa City, 37

covered by OCT No. 568 in favor of Nelly Rodriguez Versamos, is registrable, provided that all requirements for its registrability are complied with. Consulta No. 2738 and all other consultas inconsistent with this ruling are deemed to be abandoned and or superseded.

SO ORDERED. Quezon City, Philippines, March 12, 2003 HON. BENEDICTO B. ULEP Administrator

XI. SELECTED SUPREME COURT CASES ACQUISITION OF LAND BY FOREIGNERS 1. G.R. No. L-630 November 15, 1947 ALEXANDER A. KRIVENKO vs. THE REGISTER OF DEEDS, CITY OF MANILA, respondent and appellee. PERTINENT PORTIONS OF DECISION IN KRIVENKO vs. REGISTER OF DEEDS "Section 7, Article XII of the 1987 Constitution states: Save in the cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. Aliens, whether individuals or corporations, are disqualified from acquiring lands of the public domain. Hence, they are also disqualified from acquiring private lands. The primary purpose of the constitutional provision is the conservation of the national patrimony. In the case of Krivenko v Register of Deeds, the Court held: Under section 1 of Article XIII of the Constitution, "natural resources, with the exception of public agricultural land, shall not be alienated," and with respect to public agricultural lands, their alienation is limited to Filipino citizens. But this constitutional purpose conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens. It is partly to prevent this result that section 5 is included in Article XIII, and it reads as follows; "Sec.5. Save in cases of hereditary succession, no private agricultural land will be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines." This constitutional provision closes the only remaining avenue through which agricultural resources may leak into aliens' hands. It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if, after all, they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino citizens. x x x xxxx If the term "private agricultural lands" is to be construed as not including residential lots or lands not strictly agricultural, the result would be that " aliens may freely acquire and possess not only residential lots and houses for themselves but entire subdivisions, and whole towns and cities," and that " they may validly buy and hold in their names lands of any area for buildings homes, factories, industrial plants, fisheries, hatcheries, schools, health and vacation resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and purposes that are not, in appellant's words strictly agricultural." (Solicitor General's Brief, p.6.) That this is obnoxious to the conservative spirit of the Constitution is beyond question." - - - - - - - - - -0- - - - - - - - - 2. BORROMEO VS. DESCALLAR G.R. No. 159310, February 24, 2009 "WHAT ARE THE RIGHTS OF A FOREIGNER WHO ACQUIRED LAND VS. FILIPINA GIRLFRIEND IN WHOSE NAME THE TCT WAS PLACED UNDER This is the issue discussed by the Supreme Court in the case of Borromeo vs. Descallar, G.R. No. 159310, February 24, 2009. The facts are stated in the decision are: Jambrich, an Austrian arrived in the Philippines in 1983 being assigned in the country and was transferred to Cebu and met and fell in love with a separated Filipina [herein referred to as respondent with two kids and who 38

had no means of livelihood. Thereafter, they bought their house and lots but the Register of Deeds refused registration of the Deed of Absolute Sale on the ground that Jambrich was an alien and could not acquire alienable lands of the public domain and therefore his name was erased and the titles issued in the name of the Filipina. In 1986, Jambrich sold his rights and interests in the said property to a Filipino buyer, Borromeo, [the petitioner in this case] to pay for his debt but when Borromeo sought to register the deed assignment, he discovered that the titles to the lots had been transferred to the name of the Filipina and that the same had been mortgaged. The buyer, Borromeo then filed a complaint for recovery of the properties. The Filipina girlfriend claimed that she bought it with her own funds and that Jambrich being a foreigner, was not entitled to own a land in the Philippines. The Regional Trial Court rendered a decision in favor of the buyer and declared him to be the owner of the properties since the facts show that the Filipina had no means of livelihood or funds to have bought the property. The Filipina appealed and the decision was reversed by the Court of Appeals stating that the foreigner Jambrich, could not have acquired land being a foreigner. The buyer, Borromeo, appealed by way of petition to the Supreme Court which stated the issues; 1. Who purchased the subject properties? 2. What is the effect of registration of the properties in the name of the Filipina? In upholding the decision of the lower court, the Supreme Court stated: The evidence presented showed that Jambrich had all the authority to transfer all his rights, interests and participation in the subject properties by the virtue of the Deed of Assignment to the buyer, Borromeo, as it was shown that the funds to purchase the properties came from the Jambrich, who was therefore the true buyer of the property, and "Further, the fact that the disputed properties were acquired during the couple's cohabitation does not help the respondent. The rule that co-ownership applies to a man and woman living exclusively with each other as husband and wife without the benefit of marriage, but otherwise capacitated to marry each other does not apply. In the instant case, the respondent was still legally married to another when she and Jambrich lived together. In such adulterous relationship, no co- ownership exists between the parties. It is necessary for each of the partners to prove his or her actual contribution in the acquisition of property in order to be able to claim any portion of it. Presumptions of co- ownership and equal contribution do not apply." As to the registration of the properties in the name of the Filipina, the Supreme Court said, "It is settled that the registration is not a mode of acquiring ownership. It is only a means of confirming the fact of its existence with notice to the world at large. Certificates of title are not a source of right. The mere possession of a title does not make one true owner of the property. This is the situation in the instant case. Respondent did not contribute a single centavo in the acquisition of the properties. She and her two properties were then fully supported by Jambrich." As to the capacity of Jambrich, being an alien, to acquire land, the Supreme Court said, "xxxx the transfer of land to Jambrich, who is an Austrian, would have been declared invalid if challenged, had not Jambrich conveyed the properties to petitioner who is a Filipina citizen. xxxxxx The rationale behind the Court's ruling in the United Church Board for World Ministries, as reiterated in the subsequent cases, is this - since the ban on aliens is intended to preserve the nation's land for future generations of Filipinos, that aim is achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization or those transfers made by aliens to Filipino citizens. As the property in dispute is already in the hands of a qualified person, a Filipino citizen, there would be no more public policy to be protected. The objective of the constitutional provision to keep our lands in Filipino hands has been achieved." 3. MULLER VS. MULLER, G. R. No. 149625, August 29, 2006 IN REPITITION FOR SEPARATION OF PROPERTY ELENA BUENAVENTURA MULLER, -versusHELMUT MULLER, "Aliens, whether individuals or corporations, are disqualified from acquiring lands of the public domain. Hence, they are also disqualified from acquiring private lands. The primary purpose of the constitutional provision is the conservation of the national patrimony. In the case of Krivenko vs. Register of Deeds, the Court held: xxxxxx 39

Thus, in the instant case, respondent cannot seek reimbursement on the ground of equity where it is clear that he willingly and knowingly bought the property despite the constitutional prohibition. Further, the distinction made between transfers of ownership as opposed to recovery of funds is a futile exercise on respondent's part. To allow reimbursement would in effect permit respondent to enjoy the fruits of a property which he is not allowed to own. Thus, it is likewise prescribed by law. As expressly held in Cheesman v. Intermediate Appellate Court: 4. CHEESEMAN VS. INTERMEDIATE APPELLATE COURT G.R. No. 74833 January 21, 1991 THOMAS C. CHEESEMAN, petitioner, vs. INTERMEDIATE APPELLATE COURT: Finally, the fundamental law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973 Constitution ordains that, "Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain." Petitioner Thomas Cheeseman was, of course, charged with knowledge of this prohibition. Thus, assuming that it was his intention that the lot in question be purchased by him and his wife, he acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the Constitution; the sale as to him was null and void. In any event, he had and has no capacity or personality to question the subsequent sale of the same property by his wife on the theory that in so doing he is merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would permit indirect controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord in the alien husband a not substantial interest and right over land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have. As already observed, the finding that his wife had used her own money to purchase the property cannot and will not at this stage of the proceedings be reviewed and overturned. But even if it were a fact that said wife had used conjugal funds to make the acquisition, the considerations just set out to militate on high constitutional grounds, against his recovering and holding the property so acquired, or any part thereof. And whether in such an event, he may recover from his wife any share of the money used for the purchase or charge her with unauthorized disposition or expenditure of conjugal funds is not now inquired into, that would be, in the premises, a purely academic exercise. (Emphasis added) XII. LEASING OF REAL PROPERTIES BY FOREIGNERS [SALIENT FEATURES] REPUBLIC ACT NO.7652 AN ACT ALLOWING THE LONG-TERM LEASE OF PRIVATE LANDS BY FOREIGN INVESTORS Section

1. Title ––– This Act shall be known as the "Investors' Lease Act".

Sec.2. Declaration of Policy –––– It is hereby declared the policy of the State to encourage foreign investments consistent with the constitutional mandate to conserve and develop our own patrimony. Towards this end, the State hereby adopts a flexible and dynamic policy of the granting of long-term lease on private lands to foreign investors for the establishment of industrial estates, factories, assembly or processing plants, agro-industrial enterprises, land development for industrial, or commercial use, tourism and other similar priority productive endeavors. Sec.3. Definitions –––– For purposes of this act, unless the context indicates otherwise, the term: (1) "Investing in the Philippines" shall mean making an equity investment in the Philippines through actual remittance of foreign exchange or transfer of assets, whether in the form of capital goods, patents, formulas or other technological rights or processes, upon registration with the Securities and Exchange Commission; and (2)" Withdrawal of approved investment" shall mean either: (a) the failure to operate the investment project for any three (3) consecutive years; or (b) outright abandonment of the investment project at any time during the approved lease period: Provided, that failure to pay lease rental for three (3) consecutive months coupled with the failure to operate the investment project for the same period shall be deemed as outright abandonment of the project. Sec.4. Coverage –––– Any foreign investor investing in the Philippines shall be allowed to lease private lands in accordance with the laws of the Republic of the Philippines subject to the following conditions: (1) No lease contract shall be for a period exceeding fifty (50) years, renewable once for a period of not more than twenty-five (25) years; (2) The leased area should solely for the purpose of the investment upon the mutual agreement of the parties; (3) The leased premises shall comprise such area as may reasonably be required for the purpose of the investment subject however to the Comprehensive Agrarian Reform Law and the Local Government Code. 40

The leasehold right acquired under long-term lease contracts entered into pursuant of this Act may be sold, transferred, or assigned: Povided. That when the buyer, transferee, or assignee is a foreigner or a foreign-owned enterprise, the conditions and limitations in respect to the used of the leased property as provided for under this Act shall continue to apply. Sec.5. Limitations –– (1) Foreign individuals, corporations, associations, or partnerships not otherwise investing in the Philippines as defined herein shall continue to be covered by Presidential Decree No. 427 and other existing laws in lease of lands to foreigners. (2) Withdrawal of the approved investment in the Philippines within the period of the lease agreement entered into under this Act, or use of the leased area of the purpose other than that authorized, shall warrant the ipso facto termination of the lease agreement without the prejudice to the right of the lessor to be compensated for the damages he may have suffered thereby. (3) Any lease agreement under this Act which is renewable at the option of the lessee subject to the same terms and conditions of the original contract shall be interpreted to mean as renewable upon the mutual agreement of the parties. (4) In addition to the conditions for the renewal of a lease agreement after the period of fifty (50) years as provided herein, the foreign lease shall show that it has made social and economic contributions to the country. (5) In the case of tourism projects, lease of private lands by foreign investors qualified herein shall be limited to projects with an investment of not less than five million (5M) US dollars, seventy percent (70% ) of which shall be infused in said project within three years from the assigning of the lease contract, Chan Robles virtual library. Sec. 6 Termination of Lease Contract –– The Secretary of Trade and Industry shall terminate any lease contract entered into under the provisions of this Act, if the investment project is not initiated within three (3) years from the signing of the lease contract. Approved: June 4, 1993 SUPREME COURT CASES INVOLVING LEASE OF LAND/FOREIGNERS Matthews vs. Taylor, G.R. 164584, [June 22, 2009], IS THE LEASE OF REAL PROPERTY IN THE NAME OF THE FILIPINA WIFE VALID WITHOUT THE CONSENT OF THE FOREIGN HUSBAND? It is not the uncommon that real property is placed under the name of the Filipina wife who married to a foreigner in as much as a foreigner cannot own land in the Philippines save only in constitutionally recognized exceptions. In such a case, may the Filipina wife lease out the property without the consent of the foreign husband? In the Supreme Court case of Matthews vs. Taylor, G.R No. 164584, [June 22, 2009], this issue was raised wherein the Supreme Court resolved the issue of whether the contract of lease entered into by the Filipina wife over real property is valid despite the absence of consent of the foreign husband. The facts as stated in the decision are as follows: "On June 30, 1988, respondent, Benjamin A. Taylor (Benjamin), a British subject, married Joselyn C. Taylor (Joselyn), a 17- year old Filipina. On June 9, 1989, while their marriage was subsisiting, Joselyn from Diosa M. Martin a 1,294 square-meter lot ( Boracay property) situated at Manoc-Manoc, Boracay Island, Malay Aklan, for and in consideration of P129,000.00. The sale was allegedly financed by Benjamin. Joselyn and Benjamin, also using the latter's funds, constructed improvements thereon and eventually converted the property to a vacation and tourist resort known as the Admiral Ben Bow Inn. All required permits and licenses for the operation of the resort were obtained in the name of Ginna Celestino, Joselyn's sister. However, Benjamin and Joselyn had a falling out, and Joselyn ran away with Kim Philippsen. On June 8, 1992. Joselyn executed a special power of Attorney (SPA). In favor of Benjamin, authorizing the latter to maintain, sell, lease, and sub-lease and otherwise enter into the contract with third parties with respect to their Boracay property. On July 20, 1992, Joselyn, as lessor and petitioner Philip Matthews as lessee, entered into an Agreement of Lease (Agreement) involving the Boracay property for a period of 25 years, with an annual rental of P 12,000.00. The agreement was signed by the parties and executed before a Notary Public. Petitioner thereafter took possession of the property and renamed the resort as Music Garden Resort. Claiming that the Agreement was null and void since it was entered into by Joselyn without his (Benjamin's) consent, Benjamin instituted an action of Declaration of Nullity of Agreement of Lease with Damages against Joselyn and the petitioner. Benjamin claimed that his funds were used in the acquisition and improvement of the Boracay property, and coupled with the fact that he was Joselyn's husband, any transaction involving the said property required his consent." Was the lease entered into by the Filipina wife without the consent of her foreign husband valid? 41

To this the Supreme Court said, "In fine, we are called upon to determine the validity of an Agreement of Lease of a parcel of land entered into by a Filipino wife without the consent of her British husband. In addressing the matter before us, we are confronted not only with civil law or conflicts of law issues, but more importantly, with a constitutional question. It is by undisputed that Joselyn acquired the Boracay property in 1989. Said acquisition was evidenced by a Deed of Sale with Joselyn as the vendee. The property was also declared for taxation purposes under her name. When Joselyn leased the property to petitioner, Benjamin sought the nullification of the contract on two grounds; first, that he was the actual owner of the property since he provided the funds used in purchasing the same; and second, that Joselyn could not enter into a valid contract involving the subject property without consent. x x x Citing several decisions on the matter, the Supreme Court reiterated that, 'The rule is clear and inflexible; aliens are absolutely not allowed to acquire public or private lands in the Philippines, save only in constitutionally recognized exceptions. There is no rule more settled than this constitutional prohibition, as more aliens attempt to circumvent the provision by trying to own lands through another. xxxxxx It therefore ruled as follows; xxxxxx In the light of the foregoing jurisprudence, we find and so hold that Benjamin has no right to nullify the Agreement of Lease between Joselyn and petitioner. Benjamin, being an alien, is absolutely prohibited from acquiring private and public lands in the Philippines. Considering that Joselyn appeared to be the designated "vendee" in the Deed of Sale of said property, she acquired sole ownership thereto. This is true even if we sustain Benjamin's claim that he provided the funds for such acquisition. By entering into such contract knowing that it was illegal, no implied trust was created in his favor; no reimbursement for his expenses can be allowed; and no declaration can be made that the subject property was part of the conjugal/community property of the spouses. In any event, he had and has no capacity or personality to question the subsequent lease of the Boracay property by his wife on the theory that in so doing, he was merely exercising the prerogative of a husband in respect of the conjugal property. To sustain such a theory would countenance in direct controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord the alien husband a substantial interest and right over the land, as he would then have decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have. In fine, the Agreement of Lease entered into between Joselyn and petitioner cannot be nullified on the grounds advanced by Benjamin. Thus, we uphold its validity." - - - - - - - - - - - - - - -0- - - - - - - - - - - - - -

42

SALE, LEASES & MORTGAGE I. CONTRACTS A. DEFINITION: A contract is a MEETING OF MINDS between two persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305, NCC). B. ESSENTIAL REQUISITES OF CONTRACT (Art. 1318 NCC). 1. Consent of the contracting parties; 2. Object certain which is the subject matter of the contract; 3. Cause or consideration of the obligations which is established. C. FORM OR STYLE OF CONTRACTS FOR REGISTRATION: [Public Instrument] 1. Sale - in order that the same may be registered, must be in public instrument (Art. 1403 & 1406, NCC). 2. Lease - if for a period longer than one year and in order that the same may be registered, must be in public instrument (Art. 2126, NCC) 3. Mortgage - in order that the same may be registered, must be in public instrument (Art. 2126, NCC)

II. SALE OF REAL ESTATE PROPERTIES A. DEFINITION: By the Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. (Art. 1456, NCC). B. KINDS OF SALE (Art. 1458, NCC). 1. Absolute or Unconditional 2. Conditional C. CAPACITY TO BUY OR SELL REAL ESTATE PROPERTIES 1. As a rule, all persons, natural or juridical, who are authorized by the Constitution to own lands (Art. XIV) and by the New Civil Code to obligate (Art. 1469), may buy or sell real estate. 2. Only Filipino citizens or corporation at least sixty (60%) per centum of the capital of which is owned by Filipino citizens can acquire land in the Philippines. 3. A Filipina married to a foreigner retains her Philippine citizenship and, thus, also retains the right to acquire land in the Philippines 4. A Filipino citizen, who acquires citizenship of another country, can retain ownership of land acquired by him prior to his change of citizenship. 5. The husband and wife cannot sell property to each other, except (Art. 1390), NCC): a. when a separation of property has been agreed upon in their marriage settlement; or b. when there has been a judicial separation of the property under Art. 134 of the Family Code. 6. [FIDUCIARY RELATIONSHIP] - Persons who cannot acquire by purchase because of fiduciary relationship 1. GUARDIAN - the property of the person or persons who may be under his guardianship 2. AGENTS - the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given 3. EXECUTORS and ADMINISTRATORS - the property of the estate under administration 4. PUBLIC OFFICERS and EMPLOYEES - the property of the State or of any subdivision thereof, or of any government owned or controlled corporation or institution, the administration of which has been entrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever take part in the sale 5. JUSTICES, JUDGES, PROSECUTING ATTORNEYS, CLERKS OF SUPERIOR AND INFERIOR COURTS, AND OTHER OFFICERS and EMPLOYEES CONNECTED with the administration of justice - the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions 6. ANY OTHERS disqualified by law. (Art. 1491, NCC) APPLICABILITY TO LEASE The persons disqualified to buy referred to in the above are also disqualified to become lessees of the things mentioned therein. (Art. 1646, NCC) D. OBLIGATIONS OF THE VENDOR 1. The vendor is bound to transfer the ownership of, and deliver, as well as warrant, the thing which is the object of the sale (Art. 1495, NCC). 2. Unless a contrary intention appears, the sale carries (Art. 1547, NCC):  an implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall, from that time, have and enjoy the legal and peaceful possession of the property; and  an implied warranty that the thing shall be free from any hidden faults or defects, or any charge or encumbrance not declared or unknown to the buyer. 43

E. OBLIGATIONS OF THE VENDEE (Art. 1582, NCC) 1. The Vendee is bound to accept delivery of the property sold at the time and place stipulated in the contract; and 2. The Vendee is bound to pay the price of the property sold at the time and place stipulated in the contract.

F. RULE IN CASE AREA IS DIFFERENT FROM THAT STATED IN THE CONTRACT (Art. 1539, 1540 and 1542, NCC)  

If the sale is for a lump sum, there shall be no increase or decrease of the price, although there be a greater or lesser area than that stated in the contract. If the sale be made with a statement of its area at the rate of a certain price per square meter, the VENDEE may: a) If the area is bigger, choose to: 1. accept the area included in the contract and reject the excess; or 2. accept the whole are, but must pay for the excess area at the contract rate. b) If the area is smaller, choose to: 1. have a proportional reduction of the price; or 2. rescind the contract, provided: a. that the lack in are be not less than 10% of that in the contract; or b. that he would not have bought the land had he known of its smaller area.

G. RULE ON HAS A BETTER RIGHT TO OWNERSHIP OF PROPERTY SOLD TO TWO OR MORE BUYERS (Art. 1544, NCC) 1. The buyer in good faith who first recorded the sale in the Registry of Property. 2. Should there be no inscription, then the buyer in good faith who was first in possession. 3. Should there be neither inscription nor possession, then the buyer in good faith who can present the oldest title. H. DIFFERENCE BETWEEN CONTRACT TO SELL AND CONTRACT OF SALE. CONTRACT TO SELL CONTRACT OF SALE is merely a mutual promise to buy and sell a Consists of actual sale of the property property no transfer of ownership of title takes place there is transfer of ownership and title I. DIFFERENCE BETWEEN SALE WITH MORTGAGE AND SALE WITH ASSUMPTION OF MORTGAGE. A DEED OF SALE WITH MORTGAGE is a contract of sale whereby part of the purchase price is paid upon the execution of the contract with the balance to be paid within a stipulated period and the property is mortgaged by the VENDEE to the VENDOR to secure the payment of the said balance. On the other hand, a DEED OF SALE WITH ASSUMPTION OF MORTGAGE is a contract of sale whereby the property being sold is presently mortgaged and the VENDEE pays a certain amount to the VENDOR and assumes as well the existing obligation which is secured by a mortgage over the property. J. WHEN CONTRACT SHALL BE PRESUMED TO BE AN "EQUITABLE MORTGAGE" (Art. 1602, NCC) 1. When the price of sale with right to repurchase is usually inadequate. 2. When the vendor remains in possession as lessee or otherwise. 3. When, upon or after the expiration of the right to repurchase, another instrument extending the period of redemption or granting a new period is executed. 4. When the purchaser retains for himself to pay a part of the purchase price. 5. When the vendor binds himself to pay the realty taxes on the property sold. 6. In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. 7. When there is doubt as to whether the contract is a contract of sale with right to repurchase or an equitable mortgage (Art. 1602, 1603 NCC). K. MARITAL CONSENT IN DEED OF SALE 1. Marital consent is required a. when the property relations between the spouses is one of absolute community; or b. when the property relations between the spouses is one of conjugal partnership and the property involved was acquired by onerous title during the marriage at the expense of the common fund. EFFECT OF NO CONSENT (Art. 96, Art. 124 Family Code) If one spouse acts without the written consent of the other or without court authority, the disposition or encumbrance shall be void.

44

However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. Period to file questioning transactions by the wife: Within FIVE (5) years from the date of the contract 2. Marital consent is NOT necessary a. when the property relations between the spouses is one of absolute separation; or b. when the property relations between the spouses is one of conjugal partnership and the property involved: 1. was brought into the marriage by either of the spouses (property nomenclature: husband's - capital, wife's paraphernal); 2. was acquired by either of the spouses by inheritance; or 3. was acquired with exclusive funds of either of the spouses LAWS ON INSTALLMENT PAYMENTS AND THE MACEDA LAW I. APPLICABLE LAWS: 1. Republic Act No. 6552 Realty Installment Buyer’s Protection Act “MACEDA LAW” Approved: August 26,1972 2. Presidential Decree No. 957 Subdivision and Condominium Buyers Protective Decree Approved: July 12, 1976 II.

RIGHTS OF BUYERS UNDER R.A. NO. 6552 (Otherwise known as Realty Installment Buyer’s Protection Act or MACEDA LAW) REPUBLIC ACT NO. 6552

AN ACT TO PROVIDE PROTECTION TO BUYER OF REAL ESTATE ON INSTALLMENT PAYMENTS Be it enacted by the Senate and House of Representative of the Philippines in Congress assembled: SECTION 1. This Act shall be known as the “Realty Installment Buyer Protection Act” SECTION 2. It is hereby declared a public policy to protect buyers of real estate on instalment payments against onerous and oppressive conditions. SECTION 3. In all transaction or contracts, involving the sale or financing of real estate on instalment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-Eight hundred forty-four as amended by Republic Act Sixty-three hundred eighty-nine, where the buyer has paid at least two years of instalment, the buyer is entitled to the following rights in case he defaults in the payment of succeeding instalments: (a) To pay without additional interest, the unpaid instalments due within the total grace period for every one year of instalment payments made; provided , That this right shall be exercised by the Buyer only once in every five years of the life contract and its extensions, if any. (b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of instalments, and additional five percent every year but not to exceed ninety percent of the total payments made; provided, that the actual cancellation or the demand for rescission of the contract by a notarial act upon full payment of the cash surrender value to the buyer. Down payments, a deposits or options on the contract shall be included in the computation of the total number of instalment payments made. SECTION 4. In case where less than two years of instalments were paid the seller shall give the buyers a grace period of not less than sixty days from the date the installements become due. If the buyer fails to pay the instalments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act. SECTION 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act. SECTION 6. The buyer shall have the right to pay in advance any instalments or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. SECTION 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Section 3,4,5 and 6, shall be null and void. 45

SECTION 8. If any provisions of the Act is held invalid or unconstitutional no other provision shall be affected thereby. SECTION 9. This Act shall take effect upon its approval. Approved August 26, 1972. Cash Surrender Value (Refund) = Total Payments x Percentage (%age) Refund II. PERTINENT PROVISIONS OF PD 957 ON INSTALLMENT PAYMENTS Section 23. Not-Forfeiture of Payments. No instalment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favour of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer the subdivision or condominium project ma, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate. Section 24. Failure to pay instalments. The rights of the buyer in the event of this failure to pay the instalments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552 Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the instalments paid after the effectivity of the law in the absence of ay provision in the contract to the contrary.

LEASING AND RENTALS & EJECTMENT LEASE OF REAL ESTATE PROPERTIES A. DEFINITION: A contract whereby one of the parties binds himself to give to another the enjoyment or use of a thing for a price cetain and for a period which may be definite or indefinite. However, no lease for more than 99 years shall be valid (Art. 1643, NCC). B. LEGAL IMPLICATION OF LEASE 1. Unless a lease is recorded, it shall not be binding upon third persons (Art. 1648, NCC). 2. The LESSEE cannot assign the lease without the consent of the LESSOR, unless there is a stipulation to the contrary (Art. 1649, NCC) 3. Where there is no express prohibition, the lessee may sublet the property leased, in whole or in part, without prejudice to his responsibility for the performance of the contract toward the lessor (Art. 1650, NCC). C. OBLIGATIONS OF LESSOR (Art. 1654, NCC) 1. To deliver the property which is the object of the contract in such a condition as to render it to fit the use intended; 2. Ti make on the property during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted, unless there is stipulation to the contrary; an 3. To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. D. OBLIGATIONS OF LESSEE (Art. 1657 and 1663, NCC) 1. To pay the price of the lease according to the terms stipulate. 2. To use the property leased as a diligent father of a family, devoting it to the use stipulated and in the absence of stipulation, to that which it is pre-disposed; 3. To pay the expenses for the deed of lease; 4. To inform the lessor, within the shortest possible time, of every usurpation or untoward act which any third person may have committed or maybe openly preparing to carry out upon the property leased; and 5. To advise the lessor, within the shortest possible time, of the need to carry out necessary repairs of the leased property in order to keep it suitable for the use to which it has been devoted. E. GROUNDS FOR JUDICIAL EJECTMENT OF LESSEE (Art. 1673, NCC) 1. Expiration of stipulated period of lease; 2. Lack of payment of the rent stipulated; 3. Violation of any of the conditions agreed upon in the contract; or 4. Misuse of leased property which has resulted in its deterioration. F. RENT CONTROL LAW Coverage of this Act. – All residential units in the National Capital Region and other highly urbanized cities, the total monthly rent for each of which ranges from One peso (P1.00) to Ten thousand pesos (P10,000) and all residential units in all other areas, the total monthly rent for each of which ranges from One peso (P1.00) to Five thousand pesos (P5,000) as of the effectivity date of this Act shall be covered, without prejudice to existing contracts. “RENT CONTROL ACT OF 2009” REPUBLIC ACT No. 9653 [Approved July 14, 2009] SALIENT FEATURES 46

SEC. 4. Limit on Increases in Rent. – For a period of one (1) year from its effectivity, no increase shall be imposed upon th rent of any residential unit covered by this Act: Provided, That after such period until December 31,2013, the rent of any residential unit covered by this Act shall not be increased by more than seven percent (7%) annually as long as the init is occupied by the same lessee: Provided, further, That when the residential unit becomes vacant, the lessor may set the initial rent for the next lessee: Provided, however, That in the case of boarding houses, dormitories, rooms and bedspaces offered for rent to students, no increase in rental more than once per year shall be allowed. 1. “Residential unit” shall refer to an apartment, house and/or land on which another’s dwelling is located and used for residential purposes and shall include not only buildings, parts or units thereof used solely as dwelling places, boarding houses, dormitories, rooms and bedspaces offered for rent by their owners, except motels, motel rooms, hotels, hotel rooms, but also those used for home industries, retail stores or other business purposes if the owner thereof and his or her family actually live therein and use it principally for dwelling purposes. 2. Rent and Requirements of Bank Deposit. – Rent shall be paid in advance within the first five (5) days of every current month or the beginning of the lease agreement unless the contract of lease provides for a later date of payment. The lessor cannot demand more than one (1) month advance rent. Neither can he demand more than two (2) months deposit which shall be kept in a bank under the lessor’s account name during the entire duration of the lease agreement. Any and all interest that shall accrue therein shall be returned to the lessee at the expiration of the lease contract. In the event, however, that the lessee fails to settle rent, electric, telephone, water or such other utility bills or destroys any house components and accessories, the deposits and interests therein shall be forfeited in favour of the latter in the amount commensurate to the pecuniary damage done by the former. 3. Assignment of Lease or Subleasing. – Assignment of lease or subleasing of the whole or any portion of the residential unit, including the acceptance boarders or bedspaces, without the written consent of the owner/lessor is prohibited. 4. Grounds for Judicial Ejectment. – Ejectment shall be allowed of the following grounds: (a) Assignment of lease or subleasing of residential units in whole or in part, including the acceptance of boarders or bedspaces, without the written consent of the owner/lessor; (b) Arears in payments of rent for a total of three (3) months: Provided, That in the case of refusal by the lessor to accept payment of the rental agreed upon, the lessee may either deposit, by way of consignation. The amount in court, or with the city or municipal treasurer, as the case may be, or in a bank in the name of and with notice to the lessor, within one month after refusal of the lessor to accept payment. The lessee shall thereafter deposit the rent within ten (10) days of every current month. Failure to deposit the rentals for three (3) months shall constitute a ground for ejectment. The lessor, upon authority of the court in case of consignation or upon joint affidavit by him and the lessee to be submitted to the city or municipal treasurer and to the bank where deposit was made, shall be allowed to withdrawn the deposits; (c) Legitimate need of the owner/lessor to repossess his or her own use for the use of any immediate member of his or her family as a residential unit: Provided, however, That the lease for a definite period has expired: Provided, further, That the lessor has given the lessee formal notice three (3) months in advance of the lessor’s intention to repossess the property and : Provided, finally, That the owner/lessor is prohibited from leasing the residential unit or allowing its use by a third party for a period of a least (1) year from the time of repossession; (d) Need of the lessor to make necessary repairs of the leased premises which is the subject of an existing order of condemnation by appropriate authorities concerned in order to make said premises safe and habitable. Provided, That after said repair, the lessee ejected shall have the first preference to lease the same premises: Provided, however, That the new rental shall be reasonably commensurate wih the expenses incurred for the repair of the said residential unit and: Provided, finally, That if the residential unit is condemned or completely demolished, the lease of the building will no longer be subject to the aforementioned first-preference rule is this subsection; and (e) Expiration of the period of the lease contract. 1. Prohibition Against Ejectment by Reason of Sale or Mortgage – No lessor or his successor-ininterest shall be entitled to eject the lessee upon the ground that the leased premises have been sold or mortgaged to a third person regardless of whether the lease or mortgage is registered or not. 2. Rent-to-Own Scheme. – At the option of the lessor, he or she may engage the lessee in a written rent-to-own agreement that will result in the transfer or ownership of the particular dwelling in favour of the latter. Such an agreement shall be exempt from the coverage of Section 3 of this Act. 3. Coverage of this Act. – All residential units in the National Capital Region and other high urbanized cities the total monthly rent for each of which does not exceed Ten thousand pesos (P10,000.00) and all residential units in all other areas the total monthly rent for each of which does not exceed Five thousand pesos (P5,000.00) as of the effectivity date of this Act shall be covered, without prejudice to existing contracts. 47

G. PURCHASER OF LEASED PROPERTY BOUND TO RESPECT THE LEASE (Art. 1678, NCC) 1. When the lease is indicated in the deed of sale; 2. When the lease is registered in the Registry of Property; and/or 3. When the buyer has knowledge of the existence of the lease even if the same is not duly registered in the Registry of Property.

[SAMPLE] CONTRACT OF LEASE KNOWN ALL MEN BY THESE PRESENTS: This Contract of Lease, made and entered into this ______________________by and between: JOUSE S. PORRENT, of legal age, Filipino, married to_____________________and with residence at No. 2 Paupahan St., Muntinlupa City, hereinafter referred to as the LESSOR; -andPA U. PA, of Legal age, Taiwanese, married, with address at 10 th Flr. ABC Towers, Herrera St., Makati City hereinafter referred to as the LESSEE. WITNESSETH: THAT WHEREAS, the LESSOR is the registered and absolute owner of a house and lot, including all improvements found thereon, located at No. 1 Paupahan St., Ayala Alabang Village, Muntinlupa City and covered by TCT No.__________of the Registry of Deeds for Muntinlupa, and equipped with two (2) telephone lines, lighting fixtures, and those provide for in Annex “A”, hereinafter referred to as the PREMISES; WHEREAS, the LESSEE, desires to lease the above-mentioned PREMISES, and the LESSOR is willing to lease the same unto the LESSEE subject to the terms and conditions hereinafter specified; NOW, THEREFORE, for and in consideration of the foregoing and mutual covenants hereinafter contained, the LESSOR has let and these presents do hereby let and lease unto the LESSEE the PREMISES and the LESSEE hereby accepts the same by way of lease subject to the following terms and conditions: 1. PERIOD – The terms of this Contract of Lease shall be for a period of one (1) year commencing from March______________, to March______________. The LESSEE has the option to renew this Lease Contract on terms to be mutually agreed upon by the parties and in case the LESSEE desires to renew this lease, the LESSEE shall notify the LESSOR at least 60 days prior to the expiration of the current lease. 2. RENTAL – The parties herein agree that the rental for the period of lease of the PREMISES shall be a gross monthly rental of ONE HUNDRED THIRTY FIVE THOUSAND PESOS (P135,000.00), Phil. Currency, inclusive of 5% withholding tax. Value-added tax, if any, shall be for the account of the LESSE. I. On or before the effectivity of this Contract of Lease the LESSEE agrees to pay the LESSOR the following: a) The sum of ONE MILLION SIX HUNDRED TWENTY THOUSAND PESOS (P1,620,000.00), Phil. Currency representing the advance rentals for the period commencing March___________, to March___________, inclusive of five percent (5%) withholding tax. b) The sum of TWO HUNDERED SEVENTY THOUSAND PESOS (P270,000.00), Philippine Currency, representing LESSEE’s deposit in case there are unpaid bills for water, gas, electricity, telephone, association dues, and garbage fees, etc., or damages to the premises aside from natural wear and tear. Such amount will be refunded to the LESSEE and in no case later than 90 days after termination of this contract and after LESSEE vacates the PREMISES. An delay on the return of any amount/s due herein shall be subject to 2% penalty interest per month. 3. DIPLOMATIC CLAUSE – In the event the LESSEE’ employment in the Philippines is terminated by reason of transfer to another assignment outside Metro Manila or the Philippines or because of death, incapacity or similar grounds, during the period of this lease, the LESSESS or his employer or agent shall give a 60-day notice to the LESSOR of his intention to terminate the contract and vacate the leased premises. In such the event the LESSOR shall forfeit the amount equivalent to two (2) months rental as liquidated damages. In lieu of termination, however, the LESSEE shall have the right to nominate in writing his successor or any other person to succeed the LESSEE as occupant of the premises, with the written consent of the LESSOR, which shall not be unreasonably withheld, for the remaining period of this contract, the terms and conditions of which will remain unchanged except as to the named party occupying the leased premises. In all cases of termination, the advance rentals, shall, without need of demand, be refunded back to the LESSEE less the agreed liquidated damages whenever applicable, within SIXTY (60) days from receipt of written notice by LESSOR and the deposit shall be refunded to the LESSEE as per clause 2(I)b. 4. WATER, GAS, ETC. – All expenses for water, gas, electricity, telephone, association dues, cable T.V. and garbage fees including garden maintenance and maintenance of the swimming pool and pest control shall be for the account of the LESSEE. 48

5. RESIDENTIAL PURPOSE – The leased premises shall be used for residential purpose of the LESSEE or MR. _________________ and his family, including his domestic helps only and for no other purpose without the written consent of the LESSOR. The PREMISES may not be subleased without the written consent of the LESSOR. 6. IMPROVEMENTS – The LESSEE shall not make any other major structural changes, alterations or improvements in the leased PREMISES including hammering of nails on the walls for hanging pictures, etc. Without written consent of the LESSOR. However, any major alterations or improvements made or introduced by the LESSEE in the leased PREMISES with the written consent of the LESSOR shall, upon termination of this contract, automatically inure to the benefit of the leased PREMISES and become the property of the LESSOR without any obligation on the latter’s part to pay or refund the values or cost to the LESSEE. 7. SANITATION AND REPAIRS – The LESSEE shall keep the PREMISES clean and in sanitary condition and take good care of the garden and keep it in good condition at all times. Daily cooking is suggested to be done in the dirty kitchen to maintain the cleanliness and prevent the proliferation of pests and insects in the main kitchen as well as preserve its good condition. The LESSE has inspected the leased PREMISES and has found the same to be in good and tenantable condition. The LESSOR shall be responsible for all major repairs on the premises and on the water, electrical and sewage installations caused by forced majeure and ordinary wear and tear, except the repair due to the fault or negligence of the LESSEE, members of his household, guest, or visitors. Minor repairs on the leased premises under P3,500.00 which are not due to natural disaster, structural defect, nor attributed to the negligence or fault of the LESSOR shall be for the account of the LESSEE. On the other hand, maintenance and minor repairs due to force majeure, and inherent defect due to construction and materials used, shall be for the account of the LESSOR. Minor repairs referred to in this clause are those not exceeding the amount of THREE THOUSAND FIVE HUNDERE PESOS

8.

9.

10.

11.

12. 13.

14.

15. 16.

ONLY (P3,500.00) per item/occurrence while those exceeding such amount are considered major repairs in which case the LESSOR shall be liable for the whole cost. Responsibility for both pest controls shall be LESSEE’s. It is further provided that all repairs to be undertaken by LESSOR as stipulated in this Contract shall be attended to immediately and in case shall it be later than seven (7) days from the time LESSEE serves LESSOR notice of such need for repairs, otherwise, LESSEE shall have the right to have such repairs done, and costs therein shall be reimbursed by LESSOR to LESSEE upon demand by LESSEE. FIRE HAZARD AND OBNOXIOUS SUBSTANCE – The LESSEE shall not keep, deposit or store in the premises any obnoxious substance or inflammable materials or substances that constitute a fire hazard. TAXES AND INSURANCE – 5% withholding tax, Real Estate taxes, government assessments and fire insurance shall be for the account of the LESSOR, provided that the LESSEE shall pay the value added tax. THIRD PARTY LIABILITY – The LESSEE during its occupancy of the leased premises shall hold the LESSOR free and harmless from any damage or liability or responsibility to any person or property arising out of or as a consequence of the use of the PREMISES by the LESSEE, his agents, employee, domestic helps and guests. When such damage or liability is caused by fortuitous events, or acts of God, such as typhoon, earthquake, flood, etc. which are beyond the control of the LESSEE, the latter shall not be liable to the LESSOR. INSPECTION OF THE LEASED PREMISES – The LESSOR shall maintain the PREMISES in good tenantable condition and for such purpose the LESSOR reserves the right at reasonable time of the day and with prior notice, to enter and inspect the PREMISES and to make the necessary repairs thereof. The LESSEE likewise agrees to cooperate with the LESSOR in keeping the PREMISES in good and tenantable condition. RULES AND REGULATIONS – The LESSEE agrees to abide by the rules and regulations promulgated by the Ayala Alabang Village Association. SALE, MORTGAGE and TRANSFER – In the event of sale, mortgage, or transfer or any other encumbrance of the PREMISES or existing sale, mortgage, transfer or encumbrance of the same, the LESSOR warrants that the purchaser, mortgagee or encumbrance shall respect all the terms and conditions of this lease agreement including the provisions for renewal thereof. RETURN OF THE PREMISES – Upon the termination of this contract, the LESSEE shall immediately vacate the PREMISES and return possession thereof to the LESSOR, upon the latter’s request, unless the contract of lease is extended. THIRTY (30) days prior to the return of the PREMISES, the LESSOR or its representative may show the PREMISES to prospective tenants at reasonable hours of the day and with prior notice. The PREMISES must be turned over by the LESSEE to the LESSOR in the same original condition, normal wear and tear expected. Any violation of the terms provided for in this contract on the part of the LESSEE or the LESSOR shall be sufficient ground for the termination of this contract of lease by the aggrieved party. Any action arising under this contract shall be brought before the proper courts at Muntinlupa City, M. Manila, the parties hereto waiving any other venue. 49

IN WITNESS WHEREOF, the parties have hereunto set their hands: the LESSOR : at _______________________ on ____________________; and the LESSEE: at_______________________ on _________________________. LESSOR LESSEE ________________________________ ____________________________ With my marital consent: ____________________________ SIGNED IN THE PRESENCE OF: ___________________________

_____________________________

ACKNOWLEDGEMENT REPUBLIC OF THE PHILIPPINES S. S. Before me, a Nortaty Public for and in the above-named jurisdiction, personally appeared: NAME I.D. NO. DATE/PLACE JOUSE S. PORRENT PA U. PA Known to me and to me known to be the same persons who executed the foregoing instrument and acknowledge to me that the same is their free and voluntary act and deed. This instrument refers to a Contract of Lease and consist of five (5) pages including whereon this acknowledge page is written, signed on page 5 and on the left hand margin of the other pages by the parties and their instrumental witnesses. WITNESS MY HAND AND SEAL this ____________________ at ____________________. NOTARY PUBLIC Doc. No. ___________ Page No. ___________ Book No. ____________ Series of 2011

MORTGAGE, FORECLOSURES & REDEMPTION MORTGAGE OF REAL ESTATAE PROPERTIES DEFINITION: Mortgage is a contract whereby property is given as collateral to secure the performance or fulfilment of a principal obligation ( Art. 2985, NCC). A. KINDS OF MORTGAGE 1. Voluntary or conventional mortgage – one which is agreed upon by the parties or constituted by the will of the owner of the property on which it is created (NCC, MORTGAGE LAW, ETC.). 2. Legal mortgage – one required by express provision of law ( Art. 169, Mortgage Law). E. G. The alienation of any parapheral property administered by the husband gives a righ to the wife to require the constitutions of a mortgage or any other security for the amount of the price which the husband may have received (Art. 141, NCC). 3. Judicial mortgage – one resulting from a judgement of the court. 4. Equitable Mortgage – one which commonly occurs in “Pacto de Retro” sales ( Art.1602, NCC): in other words, one that is not mortgage in form but in substance. 5. Open Mortgage – one that can be paid off even before its maturity. 6. Close Mortgage – one that can be paid off only on its maturity. 7. Blanket Mortgage – several properties on mortgage for one loan. B. SUBJECT MATTER OR REAL ESTATE MORTGAGE (NCC, Mortgage Law, etc.) 1. Immovables 2. Alienable real rights imposed by law upon immovables, such as usufruct, surface right, right of redemption, etc. 3. Real properties and real rights mortgageable under certain conditions, such as the right in a voluntary mortgage. C. ESSENTIAL REQUISITES OF REAL ESTATE MORTGAGE (NCC, Mortgage Law, etc.) 1. It must be constituted to secure the performance of the principal obligation. 2. The mortgagor must be the absolute owner of the property mortgaged. 3. The mortgagor must have the free disposal of the property mortgaged, and in the absence thereof, he must be legally authorized for the purpose. 50

4. Only immovables and alienable real rights imposed upon immovables maybe made objects of contracts of real estate mortgage. 5. The deed of mortgage must be registered in the Registry if Property in order to bind third persons. 6. The foreclosed property must be sold in a public auction, and may not just be appropriated by the foreclosing creditor, to answer for the principal obligation. “PACTUM COMMISSORIUM” – void and of no legal effect. D. LEGAL IMPLICATIONS OF A REAL ESTATE MORTGAGE 1. Mortgage subjects a real estate property, whoever the possessor of the same maybe, to the fulfilment of the principal obligation ( Art. 2126, NCC). 2. The owner may alienate the property subject of mortgage, and any stipulation to the contrary shall be null and void ( Art. 2126, NCC). “PACTUM DE NON ALIENDO” – void and of no legal effect. 3. The mortgage credit may be alienated or assigned to third persons in whole or in part, with the formalities required by law ( Art. 2128, NCC). 4. The parties cannot stipulate a “tipo” or offset price at which the property will be sold at the foreclosure proceedings ( Sec. 3, Rule 68, Rules of Court). E. GROUNDS FOR FORECLOSURE OF REAL ESTATE MORTGAGE 1. Non-payment of principal obligation upon its maturity. 2. Violation of any condition or warranty stipulated in the deed of mortgage. F. KINDS OF FORCLOSURE 1. Judicial – the mortgage files a petition or complaint in court with competent jurisdiction, in which petition or complaint he is the plaintiff and the mortgagor, the defendant. He must prove the existence of the mortgage, the amount thereof, the existence of the principal obligation and the non-payment or non-fulfilment thereof. If the court is satisfied, it orders the debtor to pay the debt within ninety (90) days, otherwise, the property will be sold at public auction. 2. Extra-Judicial – the creditor or mortgage controls the details of the sale. After the posting and publication of the notice of sale, the sale itself is conducted under the direction of the sheriff, a judge of the municipal or metropolitan trial court, or a notary public of the municipality or city where the property is located. G. REDEMPTION: A transaction through which the mortgagor, or one claiming in his right, by means of a payment or the performance of a condition, re-acquires or buys back the value of one title which may have passed under the mortgage (42 C.J. 341). H. KINDS OF REDEMPTION 1. Equity of Redemption – the debtor or mortgagor may pay the amount due ordered by the court within a period of not less than ninety (90) days nor more than hundred twenty (120) days from the entry of judgment, and that in default of such payment the property shall be sold at public auction to satisfy the judgment. (Rule 60, 1997 Rules of Civil Procedure). 2. Right of Redemption – the mortgagor may redeem the property within the term of one (1) year from the date of registration of auction sale. (R. A. 3135) 3. Bank Foreclosed Properties of corporations/juridical entities – Juridical persons whose property is being sold pursuant to an extrajudicial foreclosure shall have the right to redeem the property until, but not after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds which is no case shall be more than three (3) months after foreclosure, whichever is earlier. (Sec. 47, General Banking Act of 2000)

51

Documentation and Registration CONTRACTS AND DOCUMENTATION OF REAL ESTATE TRANSACTIONS CONTRACT – DEFINITION A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (Art. 1305, Civil Code of the Philippines) Essential Requisites (Elements) of Contracts (Art. 1318, Civil Code) There is no contract unless the following requisites concur: (1) Consent of the Contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established (1) CONSENT Definition – it is the meeting of the minds between the parties on the subject matter and the cause of the contract, even if neither one has been delivered. Effect of No Consent (a) If there is absolutely no consent, there is no contract and may be considered VOID or non-existent (Example : when it was simply a JOKE between the parties who never intended to be bound by the agreement) (b) If there is consent but is vitiated such as error, fraud, or undue influence, etc., the contract is not VOID, but is merely VOIDABLE (valid until annulled) Applicable Law on Consent – Art. 1319, Civil Code, provides: Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. Acceptance made by letter or telegram does not bind the offeror except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made. Requisites of Consent 1. There must be two or more parties 2. The parties must be capable or capacitated 3. There must be no vitiation of consent 4. There must be no conflict between what was expressly declared and what was intended 5. The intent must be declared properly (legal formalities must be complied with) (Paras, Edgardo L., Civil Code of the Philippines, Vol. IV, 1985) REQUISITE FOR A PERSON TO CONTRACT IN THE NAME OF ANOTHER (AGENT, ATTORNEY-IN-FACT) Under Art. 1317 of the Civil Code, it is provided that: a) Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. b) A contract entered into the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. IF a person wants to contract in the name of another (a) He must be duly authorized (expressly or impliedly) (b) Or he must have by law a right to present him (e.g. guardian, administrator) (c) Or the contract must be subsequently ratified (expressly, impliedly, by word or deed) NOTE : IN CASE OF SALE OF A PIECE OF LAND OR ANY INTEREST THEREIN THROUGH AN AGENT, the following must be followed: Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. AUTHORITY MUST BE IN WRITING OR ELSE, THE SALE IS VOID OPTIONS Option – Definition It is a contract granting a person the privilege to buy or not to buy a certain objects at anytime within the agreed period at a fixed price. The contract of option is a separate and distinct contract from the contract which the parties may enter into upon the consumption of the contract. Therefore, an option must have its own cause or consideration, a cause distinct from the selling price itself. (But the cause or consideration may be liberality or not in money terms) General Rule 52

If the offeror has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance (of the thing being offered) by communicating such withdrawal. (Art. 1324, Civil Code) This is commonly applicable in agreements which are options to buy a particular property. (e.g. Option to buy) Exception When the option is founded upon a consideration as something paid or promised. (e.g. Option Money) GENERAL CONTENTS OF A CONTRACT TITLE Parties Object Consideration Other Provisions Notarial Page

II. DOCUMENTATION It is putting down in writing the terms and conditions and agreement of the parties to the transaction, in the appropriate legal form As type of real estate transaction General/ common Designations Sale Lease Mortgage Loan Exchange Payment Reconveyance

-

Deed of absolute sale Contract of lease Deed of Mortgage Loan Agreement/promissory Note Deed of Exchange/Deed of Assignment Dation in Payment/ Dacion en Pago Deed of Reconveyance

As to type of instrument 1. Private of Instrument – an agreement which is executed by the parties is binding and valid even though not duly notarized , except in cases prescribed by law 2. Public instrument – an agreement which has been notarized is considered a public instrument As to type based on parties executing the documents 1. UNILATERAL Deed of Sale - an agreement where only the SELLER shall execute the deed of absolute sale and will not be signed by the buyer 2. BILATERAL Deed of Sale –an agreement where both SELLER and BUYER A. PARTIES to the transaction 1. Individual (a) 1. Full namethe full names of the parties is required in the document for the proper identification of the parties to the agreement (b) 2. Legal capacity- to be able to enter into a contract , parties must be of legal age ,or at least 18 years old and is stated in the document.(if a minor or is incapacitated to contract ,then the person must be represented by the legal or authorized guardian) (c) 3. Marital statusit is also required that the status of the parties be indicated, i.e., whether single, married, the name of the spouse, widow, widower or legally separated. Importance of this is when the parties are married, the consent of the other spouse may be required by the transaction. (d) 4. CitizenshipThe citizenship of the parties must likewise be indicated as the general rule is that only Filipinos may acquire land, unless authorized by special laws. In case of Dual Citizenship Law, the party /ies may just indicate their Filipino citizenship. (e) 5.ResidenceAlthough not essential as the others, the residence must also be indicated in the deed or the address of the party to the transaction. This will also serve a useful purpose in case of notices that will be required to be given to the parties. 2. JURIDICAL PERSONS In case of juridical persons, such corporation or partnership, the document must contain the following: a. Capacity to buy land- The corporation or partnership must have the capacity to own land in the Philippines in case it is transferee(60% capital must be Filipino – owned , or as allowed by law) b. Authority to Buy/ sell- The sale or purchases is duly authorized by a board resolution of the Board of Directors of the corporation or all or the partners in the partnership 53

c. Authority to sign- The person who shall be authorized to sign in behalf of the corporation or partnership must be duly stated. Note: It does not follow that the president of the corporation is automatically duly authorized to sign in behalf of the corporation and any other person may be duly authorized by the Board of Directors. d. Principal Office- The principal office of the corporation or partnership or its address must likewise be indicated in the instrument. Document required: Board Resolution duly approved and signed evidenced by Corporate Secretary’s Certificate (duly notarized) Basis and Requirements under PD 1529 Section 55. Grantee’s name, nationality, etc., to be stated. Every deed or other voluntary instrument presented for registration shall contain or have endorsed upon it the full name , nationality , residence and postal address of the grantee or other person acquiring or claiming an interest under such instrument , and every deed shall also state whether the grantee is married or unmarried , and if married the name in full of the husband or wife . If the grantee is a corporation or association , the instrument must contain a recital to show that such corporation or association is legally qualified to acquire private lands .Any change in the residence or postal address of such person shall be endorsed by the Register of Deeds on the original copy of the corresponding certificate of title , upon receiving a sworn statement of such change .All names and addresses shall also be entered on all certificates. Notices and processed issued in relation to registered land in pursuance of this Decree may be served upon any person in interest by mailing the same to the addresses given , and shall be binding, whether such person resides within or without the Philippines , but the court may, in its discretion, require further or other notice to be given any case, if in its opinion the interest of justice so requires B.

OBJECT The object of real estate contract of sale is the property being sold and purchased. It is re required that a definite description must be indicated to properly identify the object of the contract or agreement . It is not really necessary to include the whole description in the original / transfer certificate of title so long as the properly identified though it is better to indicate the certificate of title no. and the corresponding Registry of Deeds , when it comes to sale of titled properties. SAMPLE Technical Description in Deed of Sale TRANSFER CERTIFICATE OF TITLE NO.12345 “A parcel of land (Lot 2, of the cons.-subd. Plan Pcs-12-34567, being a portion of the cons .of Lots 1& 2, Pasig Cadastre, Psc-14, L.R.C. Rec. No. 984), situated in the Brgy. Alabang, Mun. of Muntilupa, Metro Manila, Is. of Luzon. x x x x x x containing an area of SIX HUNDRED (600) SQ. METERS.xxxxxx.” C. CONSIDERATION The consideration in the real estate transaction is the purchase price of the price of the property agreed upon (unless payment is made in another form or there is an exchange of property). NOTARIZATION It is required under PD 1529, that the instrument be in the form of a public instrument, or must be duly notarized to be registered. ACKNOWLEDGMENT Acknowledgement. - “acknowledgment” refers to an act in which an individual on a single occasion:

JURAT Jurat. - “ Jurat “ refers to an act in which an individual on a single occasion:

(a) Appears in person before the notary public and presents an integrally complete instrument or document; (b) Is attested to be personally known to the notary public or identified by the notary public through competent evidence of identify as defined by these Rules; and (c) Represents to the notary public that the signature of the instrument or document was voluntary affixed by the purposes stated in the instrument or document, declares that he has executed the instrument or document as his free and voluntary act and deed, and, if he acts in a particular representative capacity, that he has the authority to sign in that capacity.

(a) Appears in person before the notary public and presents an instrument or document; (b) is personally known to the notary public or identified by the notary public through competent evidence of identity as defined by these rules; (c) signs the instrument or document in the presence of the notary; and (d) Takes an oath or affirmation before the notary public as to such instrument or document.

54

COMPETENT EVIDENCE OF IDENTITY For acknowledging documents, it is required that the parties present what is called, competent evidence of identity for notarization, as follows” Component Evidence of Identity. The phrase “competent evidence of identity” refers to the identification of an individual based on: (a) at least one current identification document issued y an official agency bearing the photograph and signature of the individual, such as but not limited to,  passport  driver’s license,  Professional regulations commission ID,  National Bureau of investigation clearance,  Police clearance,  Postal ID,  Voter’s ID,  Barangay certification  Government Service and Insurance System ( GSIS) e-card  Others, such as, Social Security System (SSS) card, Philheatlh card, senior citizen card, Overseas Workers Welfare administration (OWWA) ID, OFW ID, seaman’s book, alien certificate of registration/ immigrant certificate of registration, government office Id, certification from the national Council for the Welfare of disable persons ( NCWDP), Department of Social Welfare and Development ( DSWD) certification  Others

SAMPLE CONTRACT TO SELL KNOW ALL MEN BY THESE PRESENTS: This Contract to sell made and executed, by and between: BELEN MOO NAH, of legal age, Filipino, married to________________________________________________with address at 123 Rizal St., Manila, Hereinafter referred to as the “BUYER”; -andCEEGUE NAH NGA, of legal age, Filipino, married to Okee Sah Kheen, with address at 123 Rizal St., Manila, hereinafter referred to as the “BUYER”., WITNESSETH: THAT WHEREAS , the SELLER is the absolute and registered owner of a parcel of land with improvements thereon located at No. 123 Rizal St., Manila consisting of an area of SIX HUNDRED SQUARE METES ( 600 SQMS.), more or less, and covered by Transfer Certificate of Title No.123456 of the Registry of deeds for Manila, more particularly described as follows: TRANSFER CERTIFICATE OF TITLE NO.123456 “A parcel of land… xxxxxx WHEREAS, there SELLER is willing to sell and the BUYER is willing to buy the abovementioned property. NOW, THEREFORE, for and in consideration of the principal sum of SIX MILLION EIGHT HUNDRED THOUSAND PESOS (P6,800,000.00), Philippine Currency, the SELLER does hereby sell, transfer and convey unto the BUYER, his successors and assigns the above described property under the following terms and conditions: 1. TOTAL PURCHASE PRICE The total purchase price of the above described property shall be SIX MILLION THOUSAND PESOS (P6, 800,000.00), Philippine Currency, payable as follows: 55

EIGHT

HUNDRED

a. The amount of SIX HUNDRED THOUSAND PESOS (P 600,000.00), Philippines Currency, Representing earnest money, payable upon signing of this agreement. b. The amount of SIX HUNDRED THOUSAND PESOS (P 600,000.00), Philippine Currency, to be paid to the SELLER on or before July 1, 2009; and c. The balance in the amount of FIVE MILLION SIX HUNDRED THOUSAND PESOS (P 5,600,000.00), Philippine Currency, representing full payment of the total purchase price, to be paid on or before August 31, 2009. Any amount unpaid on its due date as above provided , shall be subject to TWO PERCENT (2%) Per month penalty interest until fully paid, without prejudice to right of the SELLER to cancel this agreement as provided herein. 2. EXECUTION OF DEED OF SALE Upon full payment of the total purchase price hereinabove provided, the SELLER shall execute and deliver to the deliver to the BUYER the Deed of Absolute Sale along with the original owner’s copy of the Transfer Certificate of Title and all other pertinent do documents thereto. 3. POSSESSION The BUYER shall be allowed to move in and take possession of the subject property, as agreed with the SELLER, in view of the sale of the present unit occupied by the BUYER. In the event however of default in the payments stipulated above, or the cancellation of this contract to sell as provided in this agreement, the BUYER shall, upon written notice from the SELLER, vacate and turn over the premises to the SELLER, unless otherwise there is an agreement in writing between the parties regarding the continued possession of the property by the BUYER. 4. TAXES, EXPENSES Capital Gains Tax, documentary stamp tax, transfer tax and registration fees for the transfer of the title to the name of the BUYER shall e for the account of the SELLER. Real Estate taxes up to the end of the Second Quarter (2nd) of 2007 shall be for the account of the SELLER. 5. CANCELLATION/ FORFEITURE In case the Buyer fails to pay the above amounts on their due dates abovementioned, or the sale is not consummated due to the default of the BUYER, this contract may be cancelled by the SELLER, without need of any judicial declaration, by serving the notice of cancellation to the BUYER and this contract shall be of no further force and effect, subject to the provisions in par.3 above. In such event, the earnest money in the amount of SIX HUNDRED THOUSAND PESOS (P 600,000.00) Philippine Currency, shall be forfeited in favor of the SELLER, as liquidated damages. Any other amount already paid by the BUYER, in excess of the liquidated damages, shall, however, be returned to the BUYER, without interest. IN WITNESS WHEREOF, the ____________________________________.

parties

“SELLER” _____________________________________

have

signed

this

___________________

at

“BUYER” ________________________________________

SIGNED IN THE PRESENCE ______________________________________

_________________________________________

ACKNOWLEDGMENT REPUBLIC OF THE PHILIPPINES) S.S. BEFORE ME, a Notary Public in and for the above jurisdiction, personally appeared: NAME ISSUED

I.D. NO.

DATE/ PLACE

BEELIN MOO NAH CEEGEE NAH NGA Known to me and to be the same persons who executed the foregoing document, and they acknowledge to me that the same is their free and voluntary act and deed. This document and they acknowledged to me that the same is their free and voluntary act and deed. This document pertains to a Contract to Sell consisting of three (3) pages including this pages including this page where in the acknowledgement is written, signed by the parties and their instrumental witnesses on each and every page thereof . WITNESS MY HAND _________________________________.

AND

SEAL on ________________________at 56

NOTARY PUBLIC Doc: No._____________; Page No._____________; Book No._____________; Series of 2011 DEED OF ABSOLUTE SALE KNOW ALL MEN BY THESE PRESENTS: This Deed of Absolute Sale executed by and between: JUAN P. DE LA CRUZ, of legal age, Filipino, married to Maria D. dela Cruz, Filipino, with address at No. 123 MADRIGAL AVENUE, Muntinlupa city, hereinafter refered to as the VENDOR, -andJOSE MA. R. TE, of legal age, Filipino, married to HENDE MA. R. TE, Filipino, with address at 888 Mahinhin St., Paranaque City. WITNESSETH: THAT WHEREAS, the VENDOR is the absolute and registered owner of a parcel of land with improvements located at No. 123 Madrigal Avenue, Muntinlupa City, containing an area of SIX HUNDRED SQUARE METERS (600 SQM.) covered by Transfer Certificate of Title No. 12345 of the Registry of Deeds for Muntinlupa City and particularly described as follows: TRANSFER CERTIFICATE OF TITLE NO. 12345 “ A parcel of land ( Lot 2, of the cons- sub. Plan Pcs-12-34567, being a portion of the cons. of Lots 1 & 2, Pasig Cadastre, Psc-14, L.R.C. Rec. No. 984), situated in the Brgy. Alabang, Mun. of Muntinlupa, Metro Manila, Is. Of uzon. x x x x x x x containing an area of SIX HUNDRED (600) SQ. METERS. Xxxxxx.” WHEREAS, the VENDEE has offered to buy and the VENDOR has agreed to sell the above described real property real property to the VENDEE; NOW, THEREFORE, for and in consideration of the sum of FIFTEEN MILLION PESOS (P15,000,000.00) Philippine Currency, receipt of which in full is hereby acknowledgement from the VENDEE, the VENDOR hereby SELLS, TRANSFERS AND CONVEYS in a manner absolute and irrevocable, in favor of the VENDEE, their heirs, successors and assigns, the above described real property free from all liens and encumbrances. Capital gains tax and documentary stamp taxes on the sale shall be for the account of the VENDOR. Transfer tax and registration fees for the transfer of the property in the name of the VENDEE shall be for the account of the VENDEE. Real estate taxes and association dues up to the execution of this deed of absolute sale shall be for the account of the VENDOR. IN WITNESS WHEREOF, we have hereunto signed this Deed _____________________________this __________________________________. VENDOR _________________________ JUAN P. DELA CRUZ

of

Absolute

VENDEE ________________________________ JOSE MA. R. TE

With my marital consent: ______________________ MA. D. dela Cruz SIGNED IN THE PRESENCE OF: ________________________

_________________________

ACKNOWLEDGEMENT BASIC OF POWERS OF ATTORNEY 57

Sale

at

I. What is a power of ATTONEY? A power of attorney is an authorization to act on someone else’s in a legal or business matter. II. WHY NEED A POWER OF ATTORNEY?  Absence of person  inability to be present  Don’t want to be present  physical incapacity  Minimize person / signatories  Future plans/ circumstances  simply busy III. Types of power of attorney 1. General power of attorney – authorizes your agent to act on your behalf in a variety of different situation for administration and general supervision and management.. 2. special power of attorney- authorizes your agent to act on your behalf in specific situations only, particularly act of dominion or ownership in real estate. IV. MAIN LAW governing Powers of Attorney New Civil code [Law on Agency] TITLE X, AGENCY, CHAPTER 1 [ARTICLE No 1868- 1932 ] V. AGENCY – Defined By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another , with the consent or authority of the latter [ Art. 1868 NCC] VI. EXPRESS or IMPLIED 1. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. 2. Agency may be oral , unless the law requires a specific form [ art. 1869,NCC ] VII. Essential Requisites (Elements) of Contracts ( Art. 1318,civil code) There is no contract unless the following requisites cocur: (4) Consent of the contracting parties: (5) Object certain which is the subject matter of the contract (6) Cause of the obligation which is established (2) CONSENT Definition – it is the meeting of minds between the parties on the subject matter and the cause of the contract, even if neither one has been delivered. Effect of No Consent (c) If there is absolutely no consent there is no contract and may be considered VOID or non- existent (EXAMPLE : when it was simply a JOKE between the parties who never intended to be bound by the agreement) (d) If there is consent but is vitiated such as error, fraud, or undue influence, etc., the contract is not VOID, but is merely VOIDABLE (valid until annulled) Applicable law on Consent – Art.1319,civil code, provides: Art.1319.Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract, the offer must be certain and the acceptance absolute, A qualified acceptance constitutes a counter- offer. Acceptance made by letter or telegram does not bind the offeror except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made. VIII. REQUISITE FOR A PERSON TO CONTRACT IN THE NAME OF ANOTHER (AGENT, ATTORNEY – IN – FACT) Under Art. 1317 of the civil code, it is provided that: Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. A contract entered into the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has executed, before it is revoked by the other contracting party. If a person wants to contract in the name of another (d) He must be duly athorized (expressly or ompliedly) (e) Or he have by law a right to represent him (e,g, guardian,administrator) (f) Or the contract must be subsequenctly ratified ( expressly, impliedly,by words or deed) NOTE : IN CASE OF SALE OF A PIECE OF LAND OR ANY INTEREST THEREIN THROUGH AN AGEN, the following must be followed: 58

Art. 1874.When a sale of piece of land or any interest therein is through an agent, the authority of the latter shall be in writing otherwise, the sale shall be avoid.

AUTHORITY MUST BE IN WRITING OR ELSE, THE SAME SALE IS AVOID OFFER MADE THROUGH AN AGENT Acceptance of an Offer Through an Agent 1. If both the offer and acceptance are made through an AGENT (who is an extension of personality of the principal), then there is a valid ACCEPTANCE. 2. If made to an AGENT (but who had no authority to bind) but merely a sort of messenger, then there is NO VALID acceptance. As provided under Aricle 1322 of the Civil code: Art.1333. An offer made through an agent is accepted from the time acceptance is communicated to him IX. WHEN SPECIAL POWERS OF ATTORNEY ARE NEEDED (Art 1878, Civil code) GENERAL POWER OF ATTORNEY VS. SPECIAL POWER OF ATTORNEY What is controlling are the contents of the power of attorney and not the heading or title of the document. It is best to look into the contents of the power and limitations in the document to determine whether it will be sufficient for the authority being delegated to the attorney- in fact. SPECIAL POWER OF ATTORNEY In general, a special power of attorney is required for the following: 1. Act of strict dominion or ownership ( as compared to acts of mere administration) 2. Gratuituos contracts 3. Contract where personal trust and confidence is of the essence is of the agreement. Or ,the following: 1) To make such payments as are not usually considered as act of administration. 2) To effect novations which put an end to obligation already in existence at the time agency was constituted 3) To compromise, to submit question to arbitration, to renounce the right to appeal from a judgement, to waive objections to the venue of an action or to prescription already aquired 4) TO waive any obligation gratuitously 5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or valuable consideration 6) To make gifts,except customary ones for charity or those made to employess in the business managed by the agent. 7) To loan or borrow money,unless the letter act be urgent and indispensable for the preservation of the things which are under administration. 8) To lease any real property to another person for more than one year 9) To bind the principal to render some service without compensation 10) To bind the principal in a contract of partnership 11) to obligate the principal as a guarantor or surety 12) To create or convey real rights over immovable property 13) To accept or repudiate an inheritance 14) To ratify or recognize obligations contracted before the agency 15) Any other act of strict dominion. X. SUBTITUTION OF AGENT In general, the agent may appoint a substitute if the principal has not prohibited him from doing so, as provided under Art.1892 of the civil code: Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the act s of the substitute: 1) When he was not given the power to appoint one: 2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insovent. All Acts of the substitute appointed against the prohibition of the principal shall be void. 59

XI. MODELS OF EXTINGUISHING AGENCY [EDWARD] 1. Expiration of period 2. Death of principal or agent 3. Withdrawal of agent 4. Accomplishment of purpose 5. Revocation 6. Dissolution of firm which granted or accepted agency XII. SPECIAL POWER OF ATTORNEY – FORM SAMPLE SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: WE, SPOUSE ________________________a ______________, Both of legal age, Filipino and with address at _________________________do hereby NAME CONSTITUTE and APPOINT,________________________ of legal age, with address at __________________________, to be our true and lawful attorney, for us and in our name, place and stead, to do the following acts and things, to wit: To MORTAGAGE, SELL, TRANSPER AND CONVEY, under terms and conditions he may deem fit and proper, the parcel of land including any improvements thereon, located at ___________________________, covered by transfer certificate of Title No._____________ of the Registry of Deeds for ____________________________, consisting of ____________________________ ,________________________SQUARE METERS (____________) , more or less, and more particularly described as follows: TRANSFER CERTIFICATE OF TITLE NO:

“------A Parcel of Land….. ___________________________________________ ( Description of Property ) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxz xxxxxxxxxxxxxxxx more or less.xxxxxxx” To enter into and sign and deliver, the mortgage contract, to sell, deed of absolute sale and any and all documents related thereto, over the above property. To collect, receive and demand any monies due or arising out of the mortgage, sale of the above property, in his name or in the name of _________________________and to encash, deposit any cheque payment thereto. To make any payment owing to any third party or government agency arising out of the sale or mortgage of said property. To do any and all acts necessary for the purpose of this authority. HEREBY GIVING AND GRANTING to our said attorney full powers and authority to do and perform all and every act requisite or necessary to carry into effect the foregoing authority, as fully to all intents and purpose as we might or could lawfully do if personally present, with full power of substitution and hereby satisfying and confirming all that our said attorney or his substitute shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, WE have her unto set our hands this ____________________, 2006 at ________________________. ____________________________ Principal _____________________________ Principal SIGNED IN THE PRESENCE OF: _____________________

__________________________

ACKNOWLEDGEMENT 60

REPUBLIC OF THE PHILIPPINES ) S.S ) BEFORE ME, a Notary Public for and in the abovenamed jurisdiction, personally appeared: NAME

IDENTIFICATION NO.

DATE/ PLACE

Known to me and to me known to the same person who executed the foregoing Special power of attorney, consisting of two (2) pages including this page wherein the acknowledgement is written and acknowledge to me that the same is their free and voluntary act and deed. WITNESS MY HAND AND SEAL this _______________________ at ______________________ . NOTARY PUBLIC Doc. No. _________ page No. _________ Book No. _________ Series of 2010. XI. DOCUMENTATION IN DEEDS DEEDS OF ABSOLUTE SALE: KNOW ALL MEN BY THESE PRESENTS: This Deed of Absolute sale executed by and between: JUAN P. LA CRUZ, of legal age, Filipino, married to Maria D. Dela Cruz, Filipino, with address at No. 123 Madrigal Avenue, Muntinlupa City, represented herein by his Attorney-in-Fact, MARIA DELOS SANTOS, hereinafter referred to as the VENDOR. - and JOSE MA> R> TE> of legal age, Filip[ino ,married to HENDE, MA. R. TE, Filipino, with address at 888 Mahinhin St. Paranaque City, represented herein by his Attorney-in-Fact, MANUEL D.ASUNCION, hereinafter referred to as the VENDOR, xxxxxx

PROPERTY REGISTRATION AND THE PROPERTY REGISTRATION DECREE SELECTED PROVISIONS IN REGISTRATION UNDER THE PROPERTY REGISTRATION DECREE P. D. 1529 CHAPTER IV CERTIFICATE OF TITLE SEC. 45. Statement of personal circumstances in the certificate. Every certificate of title shall set forth the full names of all the persons whose interest make up the full ownership in the whole land, including their civil status, and the names of their respective spouses, if married, as well as their citizenship, residence and postal address. If the property covered belongs to the conjugal partnership, it shall be issued in the names of both spouses. CHAPTER V SUBSEQUENT REGISTRATION VOLUNTARY DEALINGS WITH REGISTERED LANDS GENERAL PROVISIONS SEC. 51. Conveyance and other dealings by registered owner. - An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. SEC. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of 61

the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering. SEC.53. Presentation of owner's duplicate upon entry of new certificate. - No voluntary instrument shall be registered by the Register of Deeds, unless the owner's duplicate certificate is presented with such instrument, except in cases expressly for in this Decree or upon order of the court, for cause shown. The production of the owner's duplicate certificate, whenever any voluntary instrument is presented for registration, shall be conclusive authority from the registered owner to the Register of Deeds to enter a new certificate or to make a memorandum of registration in accordance with such instrument, and the new certificate or memorandum shall be binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and in good faith. In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice however, to the rights of any innocent holder for value of a certificate of title. After the entry of the decree of registration to the original petition or application, any subsequent registration procured by the presentation of a forged duplicate certificate of title or a forged deed or other instrument, shall be null and void. SEC. 54. Dealings less than ownership, how registered. No new certificate shall be entered or issue pursuant to any instrument, which does not divest the ownership or title from the owner or from the transferee of the registered owners. All interests in registered land less than ownership shall be registered by filing with the Register of Deeds the instrument which creates or transfers or claims such interests and by a brief memorandum thereof made by the Register of Deeds upon the certificate of title, and signed by him. A similar memorandum shall also be made on the owner's duplicate. The cancellation or extinguishment of such interests shall be registered in the same manner. SEC. 55. Grantee's name, nationality, etc., to be stated. Every deed or other voluntary instrument presented for registration shall contain or have endorsed upon it the full name, nationality, residence and postal address of the grantee or other person acquiring or claiming an interest under such instrument, and every deed shall also state whether the grantee is married or unmarried, and if married, the name in full of the husband or wife. If the grantee is a corporation or association, the instrument must contain a recital to show that such corporation or association is legally qualified to acquire private lands. Any change in the residence or postal address of such person shall be endorsed by the Register of Deeds on the original copy of the corresponding certificate of title, upon receiving a sworn statement of such change. All names and addresses shall also be entered on all certificates. Notices and processed issued in relation to registered land in pursuance of this Decree may be served upon any person in interest by mailing the same to the addresses given, and shall be binding, whether such person resides within or without the Philippines, but the court may, in its discretion, require further or other notice to be given in any case, if in its opinion the interest of justice so requires. SEC. 56. Primary Entry Book; fees; certified copies. - Each Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments including copies of writs and processes filed with him relating to registered land. He shall, as a preliminary process in registration, note in such book the date, hour and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date: Provided, that the national government as well as the provincial and city governments shall be exempt from the payment of such fees in advance in order to be entitled to entry and registration. Every deed of other instrument, whether voluntary or involuntary, so filed with the Register of Deeds shall be numbered and indexed and endorsed with a reference to the proper certificate of title. All records and papers relative to registered land in the office of the Register of Deeds shall be open to the public in the same manner as court records, subject to such reasonable regulations as the Register of Deeds, under the direction of the Commissioner of Land Registration, may prescribe. All deeds and voluntary instruments shall be presented with their respective copies and shall be attested and sealed by the Register of Deeds, endorsed with the file number, and copies may be delivered to the person presenting them. Certified copies of all instruments filed and registered may also be obtained from the Register of Deeds upon payment of the prescribed fees. (A) CONVEYANCES AND TRANSFERS SEC. 57. Procedure in registration of conveyances. - An owner desiring to convey his registered land in fee simple shall execute and register a deed of conveyance in a form sufficient in law. The Register of Deeds shall thereafter make out in the registration book a new certificate of title to the grantee and shall prepare and deliver to him an owner's duplicate certificate. The Register of Deeds shall note upon the original and duplicate certificate the date of transfer, the volume and page of the registration book in which the new certificate is registered and a reference number to the last preceding certificate. The original and the owner's duplicate of the grantor's certificate shall be stamped "cancelled". The deed of conveyance shall be filed and indorsed with the number and the place of registration of the certificate of title of the land conveyed. SEC. 59. Carry over of encumbrances. - If, at the time of any transfer, subsisting encumbrances or annotations appear in the registration book, they shall be carried over and stated in the new certificate or certificates; except so far as they may be simultaneously released or discharged. (B) MORTGAGES AND LEASES 62

SEC. 60. Mortgage or lease of registered land. - Mortgage and leases shall be registered in the manner provided in Section 54 of this Decree. The owner of registered land may mortgage or lease it by executing the deed in a form sufficient in law. Such deed or mortgage or lease and all instruments which assign, extend, discharge or otherwise deal with the mortgage or lease shall be registered, and shall take effect upon the title only from time of registration. No mortgagee's or lessee's duplicate certificate of title shall hereafter be issued by the Register of Deeds, and those issued prior to the effectivity of this Decree are hereby deemed cancelled and the holders thereof shall immediately surrender the same to the Register of Deeds concerned. SEC. 61. Registration. - Upon presentation for registration of the deed of mortgage or lease together with the owner's duplicate, the Register of Deeds shall enter upon the original of the certificate of title and also upon the owner's duplicate certificate a memorandum thereof, the date and time of filing and the file number assigned to the deed, and shall sign the said memorandum. He shall also note on the deed the date and time of filing and a reference to the volume and page of the registration book in which it is registered. SEC. 62. Discharge or cancellation. - A mortgage or lease on registered land may be discharged or cancelled by means of an instrument executed by the mortgagee or lessee in a form sufficient in law, which shall be filed with Register of Deeds who shall make the appropriate memorandum upon the certificate of title. (C) POWERS OF ATTORNEY; TRUSTS SEC. 64. Power of Attorney. - Any person may, by power of attorney, convey or otherwise deal with registered land and the same shall be registered with the Register of Deeds of the province or city where the land lies. Any instrument revoking such power of attorney shall be registered in like manner. INVOLUNTARY DEALINGS SEC. 69. Attachments. - An attachment, or a copy of any writ, order or process issued by a court of record, intended to create or preserve any lien, status, right, or attachment upon registered land, shall be filed and registered in the Registry of Deeds for the province or city in which the land lies, and, in addition to the particulars required in such papers for registration, shall contain a reference to the number of the certificate of tile to be affected and the registered owner or owners thereof, and also if the attachment, order, process or lien is not claimed on all the land in any certificate of title a description sufficiently accurate for identification of the land or interest intended to be affected. A restraining order, injunction or mandamus issued by the court shall be entered and registered on the certificate of title affected, free of charge. SEC. 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim for a period of thirty days from the date of registration. After the lapse of said period, the annotation of the adverse claim may be cancelled upon filing of a verified petition therefore by the party in interest; Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of the thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw this adverse claim by filing with the Register of Deeds a sworn petition to that effect. NOTE: A notice of adverse claim remains valid even after the lapse of the 30 day period provided by Section 70 of the Property Registration Decree. The cancellation of the adverse claim is still necessary to render it ineffective; otherwise the inscription will remain annotated and shall continue as lien upon the property. (Sajonas vs. Court of Appeals, 258 SCRA 79) SEC. 76. Notice of lis pendens. No action to recover possession of real estate, or to quiet a title thereto or to remove clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof of the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment shall have any effect upon registered land as against persons other than the parties thereto, unless a memorandum or notice stating the institution thereof, together with a reference to the number of the certificate of title, and an adequate description of the land affected and the registered owner thereof shall have been filed and registered. SEC. 77. Cancellation of lis pendens. - Before final judgment, a notice of lis pendens may be cancelled upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be registered. It may also be cancelled by the Register of Deeds upon verified petition of the party who caused the registration thereof. At any time after final judgment in favor of the defendant, or other disposition of the action such as to terminate finally all rights of the plaintiff in and to the land and/or buildings involved, in any case in which a memorandum or notice of lis pendens has been registered as provided in the preceding section, the notice of lis 63

pendens shall be deemed cancelled upon the registration of a certificate of the clerk of court in which the action or proceeding was pending stating the manner of disposal thereof. CHAPTER VI REGISTRATION OF JUDGMENTS; ORDERS; PARTITIONS SEC. 86. Extrajudicial settlement of estate. - When a deed of extrajudicial settlement has been duly registered, the Register of Deeds shall annotate on the proper title the two-year lien mentioned in Section 4 of Rule 74 of the Rules of Court. Upon the expiration of the two-year period and presentation of a verified petition by the registered heirs, devisees or legatees or any other party in interest that no claim of any creditor, heir or other person exist, the Register of Deeds shall cancel the two-year lien noted on the title without the necessity of a court order. The verified petition shall be entered in the Primary Entry Book and a memorandum thereof made on the title. No deed of extrajudicial settlement or affidavit of adjudication shall be registered unless the fact of extrajudicial settlement of adjudication is published once a week for three consecutive weeks in a newspaper of general circulation in the province and proof thereof is filed with the Register of Deeds. The proof may consist of the certification of the publisher, printer, his foreman or principal clerk, or of the editor, business or advertising manager of the newspaper concerned, or a copy of each week's issue of the newspaper wherein the publication appeared. CHAPTER XII FORMS USED IN LAND REGISTRATION AND CONVEYANCING SEC. 112. Forms in conveyancing. - The Commissioner of Land Registration shall prepare convenient blank forms as may be necessary to help facilitate the proceedings in land registration and shall take charge of the printing of land title forms. Deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary instruments, whether affecting registered or unregistered land, executed in accordance with law in the form of public instruments shall be registrable: Provided, that, every such instrument shall be signed by the person or persons executing the same in the presence of at least two witnesses who likewise sign thereon, and shall be acknowledged to be the free act and deed of the person or persons executing the same before a notary public or other public officer authorized by law to take acknowledgment. Where the instrument so acknowledged consists of two or more pages including the page whereon acknowledgment is written, each page of the copy which is to be registered in the office of the Register of Deeds, or if registration is not contemplated, each page of the copy to be kept by the notary public, except the page where the signatures already appear at the foot of instrument, shall be signed on the left margin thereof by the person or persons executing the instrument and their witnesses, and all the pages sealed with the notarial seal, and this fact as well as the number of pages shall be stated in the acknowledgment. Where the instrument acknowledged relates to a sale, transfer, mortgage or encumbrance of two or more parcels of land, the number thereof shall likewise be set forth in said acknowledgment. REGISTRATION PROCESS The process of registration of a sale of land or land with improvements from signing of deed of absolute sale will be as follows: Execution of Deed of Absolute Sale

Filing and Payment of Transfer Taxes (BIR)

Payment of Transfer Taxes (Local Government)

Registration with Register of Deeds

DEALINGS WITH REGISTERED LAND Legal Incidents and Annotations on Certificates of Title a. Voluntary Agreements, Involuntary Dealings, Court Processes and Orders 64

(under P. D. No. 1529, The Property Registration Decree) 1. Contract of Lease 2. Mortgage 3. Cancellation of Mortgage 4. Certificate of Redemption 5. Memorandum of Agreement 6. Special Power of Attorney 7. Estate Settlement a. Affidavit of Self-Adjudication b. Deed of Extrajudicial Settlement c. Sec. 4 Rule 74 of the Rules of Court (heirs, creditors or person unlawfully deprived of participation) 8. Adverse Claim - 30 day validity - No longer applicable. - in the case of Sajonas vs. C. A., July 5, 1996, the Supreme Court held in effect that a notice of adverse claim remains valid even after the lapse of the 30-day period provided by Sec. 70 of PD 1529. The cancellation is still necessary to render it ineffective; otherwise the inscription will remain annotated and shall continue as lien upon the property. RECONSTITUTION OF TITLES 1. Judicial Reconstitution under R. A. No. 26 2. Administrative Reconstitution under LRA Circular No. 13 (July 13, 1990) a. Only in case of substantial loss or destruction of land titles due to fire, flood or other force majeure b. Where the number of lost or damaged certificates of title is at least ten percent (10%) of the total number of titles in the custody of the Register of Deeds, but c. In no case shall the number of titles lost or damages is less than five hundred (500)

65

Basic Property Relations Under the Family Code EFFECTIVITY OF THE FAMILY CODE: AUGUST 03, 1988 1. BASIS OF PROPERTY RELATIONS UNDER THE FAMILY CODE Art. 74: Family Code 1. By marriage settlements executed before the marriage 2. By provisions of this Code 3. By the local custom 2. Property Relations that may be agreed upon by future spouses in marriage settlement I. Absolute Community of Property II. Relative Community of Property or Conjugal Partnership of Gains III. Complete Separation of Property IV. Upon any other regime that may be agreed upo In the absence of marriage settlements or when the same are void, the property relations shall be governed as provided for below. 3. Property Relations without Marriage Settlement Before the Family Code

Under the FAMILY CODE (Effective August 3, 1988)

CONJUGAL PARTNERSHIP OF GAINS

ABSOLUTE COMMUNITY OF PROPERTY

4. ESSENTIAL FEATURES OF THE TYPES OF PROPERTY RELATIONS 1.

CONJUGAL PARTNERSHIP OF GAINS

Conjugal partnership of gains presupposes that there are properties which are to be considered conjugal and therefore owned both by the husband and the wife, while there are those properties which still belong exclusively to each of the spouses over which they exercise exclusive ownership and administration. CONJUGAL PROPERTIES The following are considered conjugal properties; (1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition is for the partnership, or for only one of the spouses; (2) Those obtained from the labor, industry, work or profession of either or both of the spouses; (3) The fruits, natural, industrial or civil, due or received during the marriage from the common property, as well as the net fruits from the exclusive property of each spouse; (4) The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found; (5) Those acquired through occupation such as fishing or hunting; (6) Livestock existing upon the dissolution of the partnership in excess of the number of each kind brought to the marriage by either spouse; and (7) Those which are acquired by chance, such as winnings from gambling or betting. However, losses therefrom shall be borne exclusively by the loser-spouse, (153a, 154,155,159) PRESUMPTION OF BEING CONJUGAL PROPERTY Art. 116. All property acquired during the marriage, whether the acquisition appears to have been, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the country is proved. ADMINISTRATION AND ENJOYMENT OF CONJUGAL PROPERTY Art. 124. The administration and enjoyment of the conjugal partnership shall belong to both spouses jointly. In case of disagreement, the husband shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the Court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the Court before the offer is withdrawn by either or both offerors. EXCLUSIVE PROPERTIES 66

The following properties are considered as exclusive, paraphernal or belonging only to one of the spouse: 1. That which is brought to the marriage as his or her own; 2. That which each acquires during the marriage by gratuitous or lucrative title. 3. That which is acquired by right of redemption or by exchange with other property belonging to only one of the spouse and; 4. That which is purchased with the exclusive money of the wife or the husband. The general rule is that the conjugal properties cannot be alienated without the consent of both spouses; while respect to exclusive properties, the owner thereof can alienate the same without the consent of the other spouse. EFFECTS OF SEPARATION IN FACT Art.127. The separation in fact between the husband and wife shall not affect the regime of conjugal partnership, except that; (1) The spouse, who leaves the conjugal home or refuses to live therein, without just cause, shall not have the right to be supported. (2) When the consent of one spouse to any transaction of the other is required by law, judicial authorization shall be obtained in a summary proceeding; (3) In the absence of sufficient conjugal partnership property, the separate property of both spouses shall be solidarily liable for the support of the family. The spouse present shall, upon petition in a summary proceeding, be given judicial authority to administer or encumber any specific property of the other spouse and use the fruits or proceeds thereof to satisfy the latter's share. ABSOLUTE COMMUNITY OF PROPERTY Absolute Community of Property presupposes that all the present and future properties of the spouses shall be considered as belonging jointly to the husband and wife except the following; 1. Property acquired by gratuitous title by either spouse when it is provided by the donor or testator that it shall not become part of the community property; 2. Property inherited by either husband or wife through the death of a child by a former marriage, there being brothers and sisters of the full blood of the deceased child; 3. A portion of the property of either spouse equivalent to the presumptive legitimate of the children by a former marriage; and 4. Personal belongings of either spouse. The ownership, administration and usufruct of the community property pertain to the

spouses jointly.

WAIVER OF RIGHTS Art. 89. No waiver of rights, shares and effects of the absolute community of property during the marriage can be made except in the case of judicial separation of property. When the waiver takes place upon a judicial separation of property, or after the marriage has been dissolved or annulled, the same shall appear in a public instrument and shall be recorded as provided in Article 77. The creditors of the spouse who made such waiver may petition the Court to rescind the waiver to the extent of the amount sufficient to cover the amount of their credits. (146a) PRESUMPTION OF ABSOLUTE COMMUNITY PROPERTY Art. 93. Property acquired during the marriage is presumed to belong to the community unless it is proved that it is one of those excluded therefrom. OWNERSHIP, ADMINISTRATIVE, ENJOYMENT AND DISPOSITION OF COMMUNITY PROPERTY Art. 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the Court before the offer is withdrawn by either or both offerors. (206a) DONATION BY SPOUSE Art.98. Neither spouse may donate any community property without the consent of the other. However, either spouse may, without the consent of the other, make moderate donations from the community property for charity or on occasions of family rejoicing or family distress. 67

III.

COMPLETE SEPARATION OF PROPERTIES If the spouse before the marriage agree on complete separation of properties, the separation may refer to both present and future properties or it may be total or partial. The ownership, administration and usufruct of those properties which are considered separate pertain to the spouse to whom they belong. Each spouse shall proportionately bear family expenses. RIGHT TO DISPOSE, POSSESS, ADMINISTER EXCLUSIVE PROPERTY Art. 145. Each spouse shall own, dispose of , possess, administer and enjoy his her own separate estate, without need of the content of the other. To each spouse shall belong all earnings from his or her profession, business or industry and all fruits, natural, industrial or civil, due or received during the marriage from his or her separate property. RIGHT OF SPOUSE OVER EXCLUSIVE PROPERTY Art. 110. The spouses retain the ownership, possession, administration and enjoyment of their exclusive properties. Either spouse may, during the marriage, transfer the administration of his or her exclusive property to the other by means of a public instrument, which shall be recorded in the registry of property of the place the property is located. (137a, 168a, 169a) Art.111. A spouse of age may mortgage, encumber, alienate or otherwise dispose of his or her exclusive property, without the consent of the other spouse, and appear alone in the court to litigate with regard to the same. SEPARATION OF PROPERTY DURING MARRIAGE Art.134. In the absence of an express declaration in the marriage settlements, the separation of property between spouses during the marriage shall not take place except by judicial order. Such judicial separation of property may either be voluntary or for sufficient cause. (190a) Art. 135. Any of the following shall be considered sufficient cause for judicial separation of property; (1) That the spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction; (2) That the spouse of the petitioner has been judicially declared an absentee; (3) That loss of parental authority of the spouse of petitioner has been decreed by the court; (4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or her obligations to the family as provided for in Article 101; (5) That the spouse granted the power of administration in the marriage settlements has abused that power; and (6) That at the time of the petition, the spouses have been separated in fact for atleast one year and reconciliation is highly improbable. IV.

ANY OTHER REGIME Ex. Dowry system

MARITAL CONSENT IN DEED OF SALE 1.

2.

Marital consent is required, a) when the property relations between the spouse is one of absolute community and the property is community property; or b) when the property relations between the spouses is one of the conjugal partnership and the property involved was acquired by onerous title during the marriage at the expense of common fund.

the

Marital consent is NOT necessary a) when the property relations between the spouses is one of absolute separation; or b) when the property relations between the spouses is one of conjugal partnership and the property involved; 1. was brought into the marriage by either of the spouses [property nomenclature]  husband's exclusive property - capital  wife's exclusive property - paraphernal 2. was acquired by either of the spouses by inheritance; or 3. was acquired with exclusive funds of either of the spouses.

PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE Art. 147. When a man and woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall 68

be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co- ownership. In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the former's efforts consisted in the care and maintenance of the family and of the household. Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation. When only one of the parties to void marriage is in good faith, the share of the party In bad faith in the co- ownership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the respective surviving descendants. In all cases, the forfeiture shall take place upon termination of the cohabitation. (144a) COHABITATION WITH MARRIED PERSON– EFFECT ON PROPERTY ACQUIRED Art. 148. In case of cohabitation not falling under the preceding Article only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit. If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her shall be forfeited in the manner provided in the last paragraph of the preceding Article. The foregoing rules on the forfeiture shall likewise even if both parties are in bad faith.

LEGITIMATE AND ILLEGITIMATE CHILDREN LEGITIMATE CHILDREN Art. 164. Children conceived or born during the marriage of the parents are legitimate. Children conceived as a result of artificial insemination of the wife with the sperm of the husband or that of a donor or both are likewise legitimate children of the husband and his wife, provided, that both of them authorized or ratified such insemination in a written instrument executed and signed by them before the birth of the child. The instrument shall be recorded in the civil registry together with the birth certificate of the child. (55a.25a) ILLEGITIMATE CHILDREN Art.165.Children conceived and born outside a valid marriage are illegitimate, unless otherwise code.

provided in this

SURNAME OF ILLEGITIMATE CHILD UNDER FAMILY CODE Illegitimate children shall use the surname and shall be under the parental authority of their mother, and shall be entitled to support in the conformity with this Code. The legitime of each illegitimate child shall consist of one-half of a legitimate child. Except for this modification, all other provisions in the civil code governing successional rights shall remain in force. [Art. 176] AS AMENDED BY RA 9225 REPUBLIC ACT No. 9225 February 24, 2004 AN ACT ALLOWING ILLEGITIMATE CHILDREN TO USE THE SURNAME OF THEIR FATHER, AMENDING FOR THE PURPOSE ARTICLE 176 OF EXECUTIVE ORDER NO.209.OTHERWISE KNOWN AS THE "FAMILY CODE OF THE PHILIPPINES"

SECTION 1.Article 176 of Executive Order No. 209, otherwise known as the Family Code of the Philippines, is hereby amended to read as follows: "Article 176 Illegitimate children shall use the surname and shall be under the parental authority of their mother, and shall be entitled to support in the conformity with this code. However, illegitimate children may use the surname of their father if their filiation has been 69

1. expressly recognized by the father through the record of birth appearing in the civil register, or 2. when an admission in a public document or 3. private handwritten instrument is made by the father. Provided, the father has the right to institute an action before the regular courts to prove nonfiliation during his lifetime. The legitime of each illegitimate child shall consist of one-half of the legitime of a legitimate child." Approved: February 24, 2004

REPUBLIC ACT. NO. 9858 AN ACT PROVIDING FOR THE LEGITIMATION OF CHILDREN BORN TO PARENTS BELOW MARRYING AGE, AMENDING FOR THE PURPOSE THE FAMILY CODE OF THE PHILIPPINES, AS AMENDED Section1. Article 177 of Executive Order No. 209, otherwise known as the "Family Code of the Philippines" as amended, is hereby further amended to read as follows: "Art. 177. Children conceived and born outside of wedlock of parents who, at the time of conception of the former, were not disqualified only because either or both of them were below eighteen (18) years of age, may be legitimated." "Art. 178. Legitimation shall take place by a subsequent valid marriage between parents. The annulment of a voidable marriage shall not affect the legitimation." Approved: DEC. 20, 2009

70

Agrarian Reform and its Impact on Urban Development TRANSACTIONS OF AGRI. LANDS NOT COVERED UNDER CARP: DAR regulates any form of conveyances of agricultural lands from a landowner/transferor to transferee. 2. The rule is, no person is allowed to own, retain and accumulate more than 5.0 hectares of agricultural lands. 3. Any excess of 5.0 has. ownership of agricultural lands, the excess shall be covered under CARP for acquisition by the govt. and distribution to qualified farmer beneficiaries DAR CLEARANCE - Requirement before transfer is effected on a duly registered Certificate of Title before the Register of Deeds and/or Tax declarations for unregistered lands before the Municipal Assessor's Office. (DAR A.O. No. 1, Series of 1989- Rules and Procedures Governing Land Transactions) -checklist of requirements available at DAR Provincial Office WHEN IS DAR CLEARANCE NOT REQUIRED FOR TRANSFER OF TITLE OR TAX DEC. OF AGRI. LANDS? -When the land was already reclassified by the LGU from agri. to non-agri. (say, residential, commercial, industrial, etc.) before June 15, 1988 effectivity of CARP. DUE DILIGENCE FOR AGRI. LAND TRANSACTIONS: 1. Check proof of ownership of the seller whether it is clean, clear of any liens and encumbrances. (ie. Title before Register of Deeds & Tax Declaration before Municipal Assessor's Office) 2. If the tax declaration shows the land to be agricultural such as rice land, coco land, corn, mango, etc., the presumption is that the land still is classified as agricultural. Thus, DAR Clearance is prerequisite to transfer of title or tax declaration. 3. If the seller alleged that the land is already reclassified as non-agricultural prior to June 15, 1988, such allegation maybe verified by virtue of a certification issued by the HLURB. If true, no need of DAR Clearance to transfer title or tax declaration. 4. If the land is still agricultural or only reclassified as non-agri. subsequent to June 15, 1988, DAR Clearance is required and that buyer must check whether or not the seller exceeds the aggregate landownership ceiling of 5.0 hectares by way of obtaining an Aggregate Landholding Certification from the Provincial Assessor's Office and Municipal Assessor's Office where the land is located and where the seller resides. 5. If the seller does not exceed aggregate agricultural landholding of 5 has. then, the seller has no problem of transferring/conveying the lot to the buyer. 6. Furthermore, the buyer must verify from the DAR Provincial Office or the Municipal Office whether or not the land is listed as covered under agrarian reform coverage. 7. If, however, the seller exceeds 5.0 has., then the seller needs to apply for issuance of Certificate of Retention over the specific property which is a pre-requisite before DAR Clearance on the transfer will be issued by the DAR Provincial Office. If there is no certificate of retention, DAR Clearance application will be denied. 8. The excess from the 5.0 has. Retention area will be subject for land acquisition by DAR and distribution to qualified farmer beneficiaries subject to payment of just compensation. 9. On the part of the buyer, he must see to it that his ownership of agricultural lands must not exceed 5.0 has. if the land to be acquired is added to his existing lots. If the buyer exceeds 5.0 has., then DAR Clearance application will be denied to the extent of the excess. REGULATION ON THE USAGE OF AGRICULTURAL LOTS: 1. The Rule shall apply if the land is still classified as agricultural or if the land was only reclassified as non-agricultural after June 15, 1988. 2. The Rule shall apply regardless of the size of the agricultural land, tenurial arrangement and commodity produced. 3. DAR has jurisdiction to regulate the actual usage of this kind of lots to ensure food security. 4. As a rule, agricultural lands must be actually used for agricultural production. 5. DAR may authorize conversion of the usage of agricultural lands under the following circumstances*: a. The land was already reclassified by the LGU as non-agricultural after June 15, 1988. b. the land ceases to be economically feasible and sound for agricultural purposes, c. The locality has become urbanized and the land will have greater economic value for residential, commercial or industrial purpose *Sec. 22, R.A. 9700 7. “Reclassification” is different from “Conversion”* 71

“Conversion" is the act of changing the current use of a piece of agricultural land into some other use as approved by the DAR while, "Reclassification" is the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, and commercial, as embodied in the land use plan, subject to the requirements and procedures for land use conversion” ( Alarcon v. CA, Ros v. DAR, CREBA v. DAR) “Conversion" is within the jurisdiction and authority of the Dapartment of Agrarian Reform (DAR) per R.A. 6657 as amended by R.A. 9700 "Reclassification" is within the jurisdiction and authority of the Local Government Unit (LGU) like the Provinces, Cities and municipalities per the Local Government Code R. A. 7160 8. DAR has authority to approve application for land use CONVERSION of agricultural lands to nonagricultural use. - DOJ Opinion no. 44 Series of 1990

- ROS V. DEPARTMENT OF AGRARIAN REFORM - CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. (CREBA), v. THE SECRETARY OF AGRARIAN REFORM (G.R. No. 183409, June 18, 2010) CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. (CREBA), v. THE SECRETARY OF AGRARIAN REFORM (G.R. No. 183409, June 18, 2010) “XXX XXX XXX, a mere reclassification of an agricultural land does not automatically allow a landowner to change its use. He has to undergo the process of conversion before he is permitted to use the agricultural land for other purposes.” “It is clear from the aforesaid distinction between reclassification and conversion that agricultural lands though reclassified to residential, commercial, industrial or other non-agricultural uses must still undergo the process of conversion before they can be used for the purpose to which they are intended.” “Nevertheless, emphasis must be given to the fact that DAR’s conversion authority can only be exercised after the effectivity of Republic Act No. 6657 on 15 June 1988. The said date served as the cut-off period for automatic reclassification or rezoning of agricultural lands that no longer require any DAR conversion clearance or authority. Thereafter, reclassification of agricultural lands is already subject to DAR’s conversion authority. Reclassification alone will not suffice to use the agricultural lands for other purposes. Conversion is needed to change the current use of reclassified agricultural lands.” “xxx xxx xxx. For reclassified agricultural lands, therefore, to be used for the purpose to which they are intended there is still a need to change the current use thereof through the process of conversion. The authority to do so is vested in the DAR, which is mandated to preserve and maintain agricultural lands with increased productivity. Thus, notwithstanding the reclassification of agricultural lands to nonagricultural uses, they must still undergo conversion before they can be used for other purposes.

72

73

Land and Property Development

 Surveying, Site Location and Map Reading  The Housing and Land Use Regulatory Board (HLURB)  Subdivision and Townhouse Concept and Development  Urban and Rural Land Use, Planning, Development and Zoning  Condominium Concepts and Other Types of Real Estate Holdings  Joint Venture Arrangements  Basic Principles of Ecology

74

SITE LOCATION AND MAP READING SITE LOCATION SITE INSPECTION - Actual ocular field inspection of the site or lot Importance of lot plan Site’s natural features and landmarks Land monuments and boundaries Tie line and reference point Tie line is in imaginary line which connects a parcel of land (at point) to an established reference point. 2,000 m.

Reference point is an established land monument at a particular site or location. ( such as : BLMM,BBM,LM,BM,MBM,FH, etc.) Sketching while inspecting use of magnetic compass is a simple hand held instrument with a magnetized needle which points toward magnetic north. It is used in determining angles and directions and is well suited for preliminary surveys, PACING is the counting the number of steps in a required distance. Pace - The length of a singe step Stride - Two paces or a double step Pace Factor is a value determine by dividing the measured or known length of a line by the mean number of paces taken to walk or traverse the line. Length of a Pace 1 Stride (2 paces or a Double Step) 1 Pace (Hell to Hell)

1 Pace (Toe to Toe)

1 Stride (2 paces or a Double Step)

75

Bearings and Azimuth N 38000

AZIMN = 1200 AZIM5 = 3000

Meridian

Bearing is always an angle less than 90% from N or S (medium) which ever is nearest.

120 1200 1000

A

W…….. 2700

Azimuth is always the clockwise horizontal angl between the time and given meridian.

900 F 600 B Bearing S………E

1800 S MAP READING Topographic (TOPO) Map is a map showing all the details that make up the features of the earth. Contour Lines: are lines that indicate variation in land elevation, The difference in elevation between neighboring lines is called the contour Interval.

Hachures (ha – shycorz ) drawn in the direction down the slopes.

are short straight lines that water would take

VACINITY MAP A Map which shows the general location of the property and its vicinity

76

LOT PLAN Plan showing the boundaries and shape and distances of the property lot

A = 200 sqms.

SOME SURVEYS SYMBOL LOCATION AND BOUNDARY MONUMENT BLLM Bureau of lands Location and Monument* BLBM Bureau of lands Barrio Monument* CBM City boundary Monument PBM Provincial Boundary Monument MBM Municipal Boundary Monument BBM Barrio Boundary Monument PUBLIC LAND SURVEY Ap Advance plans H Homestead application F Free Patent application Si Sales Application, Individual Sc Sales Application, Corporation* Mci Miscellaneous Sales Application, individual* Li Lease Application, Individual Lc Lease Application, Corporation Mli Miscellaneous Lease Application, Individual Mlc Miscellaneous Lease Application, Corporation PRIVATE LAND SURVEY Psu Private Survey Psd Private Subdivision Pcn Private Consolidation Survey Pcs Private Consolidation-Subdivision Survey GOVERNMENT LAND SURVEY Flb Friar Land Survey Fls Friar land Subdivision Fls Friar lands Relocation Ngl National Government Property Lease Ngs National Government Property Sale OTHER LAND SURVEYS Ml Monument Location Survey* Ms Municipal Streets Survey Prs Provincial Road survey Pb Political Boundary Swo Special Work Order Amd Amendment Survey Tri Triangulation Survey Top Topographic Survey Rs Resurvey* Rel Relocation Survey* Vs Verification Survey* Sgs Segregation Survey* 77

HOUSING AND LAND USE REGULATORY BOARD HLURB A. LAWS 1. Executive Order No. 648 (1981) The HLRB was reorganized and revitalized and was vested with quasijudicial powers to make it a more effective regulatory agency. By virtue of said order, it assumed the functions of the National Housing Authority on real estate management and was mandated to enforce P.D. 957, P.D. 1216 and P.D. 1517 among others. 2. Executive Order No. 90 (1986) The HLURB was designated as the sole regulatory body for housing and land development. It was mandated to encourage greater private sector participation in low cost housing through liberalization of development standards, 3. Presidential Decree 957 (PD 957, 1976) Otherwise known as the Subdivision and Condominium Buyers Protective Decree. Its features are regulates sale of subdivision lots and condominium units to buyers defines sale to be covered by registration defines duties and responsibilities of owner/developer (o/d) of condominium and subdivision projects. defines rights of condominium/subdivision units/lots buyers. 4. Batas Pambansa 220 (BP 220, S. 1982 Authorized HLURB to promulgate different levels of standards and technical requirements for economic and socialized housing projects from those provided for under PD 957, PD 1216, PD 1096 and PD 1185. 5. Republic Act 7279 (1992) Provides for Balanced Socialized Housing Program through provision of low cost housing program (SHP) intended to benefit the underprivileged and homeless and to be sold at the lowest interest rate. Requires developers of residential subdivision projects to allocate 20% of the projects area/cost into socialized housing. 6. Republic Act No. 8763 or The Home Guaranty Act Transferred to HLURB all the powers, authorities and responsibilities with respect to supervision of homeowner associations. 7. Presidential Decree No. 1216 (1977) Defines open spaces in residential subdivision and amended Sect. 31 of PD 957. Requires subdivision owners to provide adequate roads, alleys, sidewalks and reserved open spaces for parks or recreational use equivalent to 30% of the total area of the subdivision project; and are non-saleable/non-alienable public lands. 8. Republic Act 6652 'Maceda Law" (1972) Provides protection to buyers of residential units on installments against scrupulous sellers/contracts (including residential condominium apartments, but excluding industrial lots, commercial buildings and sales to tenants). 9. Presidential Decree No. 1517 (1978) Provides for protection of legitimate tenants and requires clearance for development proposals and land transactions in proclaimed Areas for Priority Development (APDs) and Urban Land Reform Zones (ULRZs). Its important features are under Section 6, defines legitimate tenants as follows: a) Ten years residency or more; b) They were the ones who built their homes; c) Legally occupied the lands by virtue of contract with landowners continuously for ten years; d) Used the lands for residential purpose only. 10. Republic Act 7160 or the Local Government Code of 1991: Devolves the following function of HLURB to the local government units: - Issuance of approval of subdivision plans to local government units (LGUs) subject to national laws and standards; -Devolves to the Sangguniang Panlalawigan, subject to national guidelines and standards the approval of comprehensive land use plans of municipalities. 11. Executive Order No. 71 (1993) Provides for implementing guidelines and role of HLURB in the devolution of approval of subdivision plans to 78

the LGUs. 12. Executive Order No. 72 (1993) a) Provides that HLURB shall review and approve land use plants of provinces, highly urbanized cities, and all of the independent component cities/municipalities within Metro Manila; b) Devolves the issuance of location clearance to LGUs. 13. Republic Act 7899 (1995) Amends Section 4 and 16 of RA 4726 or the "Condominium Act", where HLURB is given the following authorities: a) Approval of any amendment to or revocation of the enabling or master deed of s condominium project subject to consent by a simple majority of all registration owners, and where prior notification to all registered owners is done. b) Approval of the expansion of a condominium corporation or integration of a condominium project with another project upon the affirmative vote of a simple majority of registered owners. 14. Republic Act 6657 or the Comprehensive Agrarian Reform Law (June 15, 1988) Implements a comprehensive agrarian reform with the intention that any conversion of a private agricultural land to non-agricultural uses should first be cleared before hand by the Department of Agrarian Reform. (Please see attached notes on this RA 6657 or CARP). 15. Presidential Decree No. 1586 (1970) Requires all person, partnership or corporation to secure an Environment Compliance Certificate prior to undertaking any activity. 16. Proclamation No. 2146 (1981) Proclaimed certain areas and types of projects as environmentally critical and within the scope of the requirements of PD 1586. B.

DEFINITION OF TERMS

1. SALE: As defined under Section 1(b) of PD 957: Sale or Sell. "Sale" of "Sell" shall include ever disposition, or attempt to dispose for a valuable consideration of a subdivision lot including the building and other improvements thereon, if any in a condominium project. "Sell" or "Sale" shall also include a Contract to Sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, letter, advertisement or otherwise. A privilege given to a cooperative, corporation, partnership, or any association and/or the issuance or receipt evidencing of giving the right of participation in, or right to any land in consideration of payment of the membership fee or dues, shall be deemed a sale. 2. SOCIALIZED HOUSING PROJECT As defined pursuant to Section 18 of RA 7279: Refers to housing and projects covering houses and lots or home lots only undertaken by the Government or the private sector for the underprivileged and homeless citizens which shall include sites and service development, long term financing, liberalization terms on interest payments, and such other benefits in accordance with RA 7279. In addition to the definition in RA 7279, it shall refer to projects intended for the under-privileged and homeless wherein the housing package-selling price is within the lowest interest rate under the Unified Home Lending Program or any equivalent housing program of the government, the private sector or non-government organizations. [As per HUDCC Resolution No. 1, Series of 2008, the socialized housing loan ceiling has been increased from P3000,000 to P400,000 effective December 2008] 3. BULK BUYING Refers to the purchase by a person, natural of juridical, of more than one saleable lot or unit within an HLRB approved subdivision for the purpose of re-selling the same with or without introducing alteration in the approved plan. (Please refer to notes on exempt transaction). 4. CERTIFICATE OF REGISTRATION (CR) An issuance of HLURB that is proper only upon compliance with Section 4 of PD 957 and other similar provisions of the various rules. It vests legal status in a project such that its name may be changed only upon proper application and publication among other requirements.3 5. LICENSE TO SELL (LS) A document granting authority to any registered owner/developer to sell lots or units within an approved subdivision or condominium project and providing for the duties and responsibilities of said owner/developer. 6. TOWN PLAN 79

a) It is an official public document adopted by a local government unit as guide to decision regarding the physical and socio-economic development of their community. b) It provides for the directions on how the local leaders and their population would want their community to develop within a given framework of time. c) It sets the goals, objectives and policy guidelines of the local government unit after defining the strengths and weaknesses, identifying its opportunities and threats in relation to its environs. In the Philippines, a town plan is synonymous to comprehensive development plan, city plan, physical framework plan, comprehensive land use plan, or municipal development plan. 7. LAND USE PLAN It is the rational and deliberate allocation of land resources to different uses based on the comprehensive and integrated plan for area. It translates the social-economics, the infrastructure and environment plan into land allocations. 8. ZONING It is the division of the community into functional zones on the present and potential uses of properties for the purpose of regulating the use growth of properties in accordance with the comprehensive development plan of the town/city. 9. ZONING ORDINANCE It is the enacted legislation which among other a) regulations affecting uses allowed or disallowed in each zone or district; b) conditions for allowing them; c) procedures for processing a request for a clearance and d) penalties for violating any of its previsions. 10. LOCATIONAL CLEARANCE It is written authorization or permit to develop or use or construct in certain areas of any parcel of land based on approved land used plan or zoning ordinance; in the absence of a zoning ordinance the grant of permit shall be base on HLURB planning standard and guidelines. 11. ECOLOGY A branch of science concerned with the interrelationship of organism and their environment. 12. ENVIROMENT Includes the physical factors of the total surroundings of human being includes the land, water, atmosphere, climate sound, odor, tastes, the biological factors of animals and plants and the social factors of aesthetics. In abroad since, it shall include the total environment of man such as economics, social, cultural, politics and historic factors. 13. CONVERSION The act of authorizing the change of the current use of a piece of agricultural land into non-agricultural use; such permit is proper only upon issuance of a clearance from the Department of Agrarian Reform. 14. AGRICULTURAL LAND Refers to land devoted to or suitable to agriculture as defined in RA 6657 and owed by natural or judicial person/s, or by the government in its proprietary capacity. 15. PRIVATE AGRICULTURAL LAND Lands devoted to or suitable agriculture as defined in RA 6657 and owed by natural or judicial persons, or by the government in its proprietary capacity. ( For Nos. 13, 14 & 15 please refer to attached notes on RA 6657 or CARP). 16. DEALER Shall mean any person directly engaged as principal in the business of selling; or exchanging real estate whether on full-time or part-time basis (Section 2 (k), PD 957. A bulk buyer, which is for purposes of this guidelines, is covered in the definition of a dealer, shall mean any person who acquires a lot or a portion of the subdivision and who, with or without re-subdividing or introducing housing or other facilities, sell the same, under its previous license to sell or in a license to sell in his name to the public. 17. SUBDIVISION PROJECT As defined under Section 2(d) of PD 957, a tract or a parcel of land registered under Act No. 496 which is partitioned primarily for residential purpose into individual lots with or without improvements thereon and offered to the public for sale, in cash installment terms. It shall include all residential, commercial, industrial and recreational areas as well as open spaces and other community and public areas in the project. 18. "HABITUALLY ENGAGED IN REAL ESTATE BUSINESS' IN ACCORDANCE WITH REVENUE REGULATIONS NO. 2-98 A person or entity habitually engaged in real estate business is one who, as owner or developer undertakes development and contraction of subdivision/housing for sale to the general public as his/its regular source of income; and has submitted and update his/its reportorial requirements to HLURB in accordance with the 80

government standards, rules and regulations. C. ENVIRONMENTALLY CRITICAL AREA (ECA): Refer to areas that are ecologically, socially, or geologically sensitive as declared by law such as: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Areas declared by law as national parks, watershed reserves, wildlife preserves and sanctuaries; Areas identified as potential tourist spots; Areas that are habitats of endangered or threatened species of indigenous Philippine plants and animals; Areas of unique historic, archeological or scientific interest; Areas traditionally occupied by indigenous people or cultural communities; Areas frequently hit by natural calamities (geologic hazards, floods, typhoons and; volcanic activities); Areas with critical slopes of 18% and above; Areas classified as prime agricultural lands; Recharged areas of aquifer; Water bodies used for domestic supply used to support fisheries and wildlife; Mangrove areas with critical ecological functions or on people depend for livelihood; or Coral reefs

D. ENVIRONMENTALLY CRITICAL PROJECTS (ECP) refers to a: 1. Heavily industry involving ferrous metal, iron or steel mills; petroleum or petro-chemical, oil gas, or smelting plants; 2. Resource extractive project such as major mining and quarrying project, forestry logging project, major wood processing, introduction of fauna of exotic animals in public or private forest, forest occupancy, extraction of mangrove products, grazing, fishery dikes, or fishpond development; 3. Major infrastructure project such as dam, power plant (utilizing fossil-fuel, hydroelectric, geothermal, nuclear power), reclamation, bridge, or a major road; or 4. Golf course project. E. DIFFERENT TYPES OF PROJECTS REQUIRING CERTIFICATE OF REGISTRATION and LICENSE TO SELL from HLURB 1. Condominium 1.1 Residential 1.2 Commercial 1.3 Mixed Residential-Commercial 2. Residential Categories: PD 957 Open market only No price ceiling

BP 220 Economic Socialized sells @ P/500,000.00/ house & lot 30% open space is Open space requirements is computed based on the mandatory PD 1216 density of the project and not covered by 30% open space requirement 1. Follows the National Building Relaxes the provisions NBC and FC but design should Code (NBC) and the Fire Code (FC) conform with the minimum design standards by HLURB and; 2. Follows the minimum in pursuance to the adoption of BP 220; this serves as an design standards set forth by incentive to developers to engage in housing for the HLURB middle income group and the low income group. What are the latest price ceilings? The current price ceiling as set by the Housing and Urban Development Coordinating Council (HUDCC) as per MC No. 5 Series of 2007 Re: Redefinition of Loan Ceiling/Packages are as follows: Socialized housing=PHP 400,000.00 and below (per HUDCC MC No. 1, Dec. 11, 2008); Low Cost -Level 1 =above PHP 300,000.00 to PHP 1,250,000.00 (BP 220 standard); -Level 2 =above PHP 1,250,000.00 to PHP 2,000,000.00 (PD 957 standard); Medium cost =PHP 2,000,000.00 up to PHP 4,000,000.00; Open Housing =above PHP 4,000,000.00

3. Commercial Subdivision 4. Industrial Subdivision 5. Industrial Estate 81

6. Memorial Parks and Cemeteries F. BASIC REQUIREMENTS IN PROCESSING FOR CERTIFICATE OF REGISTRATION AND LICENSE TO SELL 1. For residential projects 1.1 Clearance from DAR, if applicable; conformity with the Zoning to the area 1.2 Development plan approved by the Local Government Unit 1.3 Environment Compliance Certificate 1.4 Verified survey returns from the LMS-DENR 1.5 Right over land, free from liens and encumbrances 1.6 Program of development 1.7 Organizational and financial capability to complete the project 1.8 Copy of contract to sell ads materials to be used in the sale 1.9 Compliance to Sec. 18, of RA 7279 or the Socialized Housing Project 2. For commercial, form lots, memorial parks and industrial estates numbers 1.1 to 1.8 above 3. Condominium Projects 3.1 Plans to be approved by HLURB 3.2 Master Deed with Declaration of Restrictions 3.3 Building Permit 3.4 Number 1.1 up to 1.8 above In case where the project is not yet started or fully developed, the remaining development shall be covered by a performance bond. All of these projects can only be registered after the required publications and upon findings that the sale will not be fraudulent, the owner/developer is not ill refute and that they are organizationally and financially capable to compete the project. G. EXEMPTED TRANSACTIONS from securing CR/LS Section 7, P.D. 957 a) Sale of a subdivision lot resulting from partition of land among co-owners and heirs; b) Sale or transfer of subdivision lot by the original purchase thereof and any subsequent sale of the same lot; c) Sale of subdivision lot or a condominium unit for the account of a mortgage in the ordinary course of business when necessary to liquidate a bonafide debt. 3. Per Resolution No. R-546 s. 1994: Rules on Bulk buying as an Exempt Transaction a) Bulk Buying as exempt transaction: Bulk-buying of lots and subsequent introduction of housing unit without altering the original plan. b) Bulk Buying as not Exempted from securing CR/LS: Bulk Buying with construction of housing units resulting in increased density from the original plan approval. Bulk Buying in the re-subdivision of lots and issuance of new TCTs. 4. On site Community Mortgage Projects 5. NHA controlled projects 6. On-site housing projects of non-governmental and non-profit organizations and foundations engaged in community development for underprivileged and the homeless sector from the licensing requirements of the HLURB. H.

Mode of Compliance with Section 18 of R.A. 7279 The developer may choose any of the following as compliance: 1. Development of a New Settlement 2. Slum Upgrading. To be certified by the National Housing Authority or the Local Government Unit concerned. 3. Participation in the Community Mortgage Program (CMP) either as a financier or a developer. 4. Joint Venture Project with the Local Government Unit concerned consisting of:

Joint-Venture Projects. The developer may enter into a joint project or agreement with the concerned local government unit, with another private developer or any of the housing agencies, to develop a socialized housing project. His participation shall be equivalent to 20% of project area or 20% of the cost of the main subdivision project. The developer shall be required to submit to the HLRB a copy of the Joint-Venture Contract as proof of Participation in a Joint-Venture Project. THE JOINT VENTURE AGREEMENT SHOULD CONTAIN THE FOLLOWING: THE CONTRIBUTION OF A SPECIFIED SUM TO A COMMON FUND AND THE SHARING OF PROFITS. (As amended by HLURB Board Resolution No. 806, Series of 2007) 5. Purchase of socialized housing bonds from PAG-IBIG. I. Duties and Responsibilities of Owners/Developers of Subdivision and Condominium Projects under PD 957 (Please refer to the particular sections of PD 957 as follows:) 1. Mortgage: Section 18 2. Advertisement: Section 19 3. Time of Completion: Section 20 4. Alteration of Plan: Section 22 5. Non-Forfeiture of Payments: Section 23 6. Issuance of Title: Section 25 7. Donations of Open Spaces: Section 31, as amended by PD 1216 82

8. Organization of Homeowners Association: Section 30 9. Realty Taxes Payment: Section 26 10. Other Charges: Section 27 J. REVISED RULES AND REGULATIONS TO GOVERN ADVERTISEMENT APPROVAL [HLURB Board Resolution No. 808, Series of 2007] 1. Scope of Application. These Rules and Regulations shall apply to all applications for Advertisement Approval for the following projects issued Certificate Of Registration And License To Sell, hereinafter referred to collectively as Project: a. Residential/commercial condominium and subdivision b. Farm lot subdivision c. Industrial subdivision d. Memorial park e. Columbarium project f. Any other similar project Advertisement as referred to in this Rules shall mean any form of information dissemination, whether through words, illustrations, scaled models for public display or in any form of multi-media. [Section 1] 2. Advertisement Approval, approval of the advertisement is required prior to its distribution, display and/or publication/broadcast. [Section 2] 3. Contests of Advertisement. The following shall be indicated/reflected in the advertisement: a. The exact location of the project in terms of distance from a well known b. reference point; c. The License to Sell Number and date issued; d. Project completion date per approved work program e. Maximum selling price in case of economic and socialized housing projects; f. The name(s) of the owner(s) of the project; g. Pictures or illustrations if any shall be captioned as "actual photographs"' "architect's perspective" or "artist's illustrations", as the case may be. [Section 5] 4. What Should Not Be Included In The Advertisement. The following shall not be included in the advertisement: [Section 6] 1. Disclaimer(s) 2. Any future development not covered by the license to sell 3. Exaggeration or misleading information 5. Advertisement Approval. The Board shall issue the Advertisement Approval when all the requirements of sections 4 to 6 are complied with. The approval shall consist of a letter from the HLURB Regional Officer stating approval of the advertisement material and authority to publish, display, distribute or announce the same, and further stating therein all other conditions as maybe imposed. The letter of approval and the approved copy of advertisement material shall in all instances bear the HLURB seal. Further, the latter shall be stamped "approved" indicating date duly signed by the regional officer. Any deviation from the advertisement material shall be a violation of the approval and a ground for revocation of the approval [Section 7] 6. Warranties. The owner or developer shall be answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in PD 957. [Section 8] PRESIDENTIAL DECREE NO. 957 THE SUBDIVISION AND CONDOMINIUM BUYER'S PROTECTIVE DECREE REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS PROVIDING PENALTIES FOR VIOLATIONS THEREOF. WHEREAS, it is the policy of the State to afford its inhabitants the requirement of decent human settlement and to provide them with ample opportunities for improving their quality of life; WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water system, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers; WHEREAS, reports to alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and condominium seller and operations, such as failure to deliver titles to the buyers or titles fee from liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers for value; WHEREAS, this acts not only undermine the land and housing program of the government but also defeat the objectives of the New Society, particularly the promotion of peace and order and the enhancement of the economic, social and moral condition of the Filipino people; 83

WHEREAS, this site of affairs has rendered it imperative that the real estate subdivision and condominium business be closely supervised and regulated, and that penalties be imposed on fraudulent practices and manipulations committed in connection therewith. NOW, THEREFORE, I FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me be the Constitution, de hereby decree and order: TITLE 1-TITLE AND DEFINATIONS SECTION 1. Title. - This Decree shall be known as THE SUBDIVISION AND CONDOMINIUM BUYER'S PROTECTIVE DECREE. SECTION II. Definition of Terms. - When used in this Decree, the following terms shall, unless the context otherwise indicates, have the following respective meanings: a) Person. - "Person" shall mean a natural or a juridical person. A juridical person refers to a business firm whether a corporation, partnership, cooperative or association or a single proprietorship. b) Sale or Sell. - "Sale or Sell" shall include every disposition, or attempt to dispose for a valuable consideration, of a subdivision lot, including the building and other improvements thereon. If any in a subdivision project or a condominium project. " Sale or Sell " shall also include a contract to sell, an exchange , an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular, letter, advertisement or otherwise. A privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to, any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition. c) Buy and Purchase. - The term "buy" and "purchase" shall include any contract to buy, purchase, or otherwise acquire for a valuable consideration a subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project. d) Subdivision Project. - "Subdivision Project" shall mean a tract or a parcel of land registered under Act No. 496 which is partitioned primarily for residential purposes into individual lots with or without improvement thereon, and offered to the public for sale, in cash or in installment terms. It shall include all residential, commercial, industrial and recreational areas as well as open spaces and other community and public areas in the project. e) Subdivision Lot. - "Subdivision Lot" shall mean any of the lots, whether residential, commercial, industrial, or recreational, in a subdivision project. f) Complex Subdivision Plan. - "Complex Project" shall mean a subdivision plan of a registered land wherein a street, passageway or open space is delineated on the plan. g) Condominium Project. - "Condominium Project" shall mean the entire parcel of real property divided primarily for residential purpose into condominium units, including all structures thereon. h) Condominium Project. - "Condominium Unit" shall mean a part of the condominium project intended for any type of independent be appended thereto. i) Owner. - "Owner" shall refer to the registration owner of the land subject of a subdivision or a condominium project. j) Developer. - "Developer" shall mean the person who develops or improves the subdivision project or condominium project for and in behalf or the owner thereof. k) Dealer. - "Dealer" shall mean any person directly engaged as principal in the business of buying, selling or exchanging real estate whether on a full-time or part-time basis. l) Broker. - "Broker" shall mean any person who, for commission or other compensation, undertakes to sell or negotiate the sale of a real estate, belonging to another. m) Salesman. - "Salesman" shall refer to the person regularly employed by a broker to perform, for and in his behalf, any or all the functions of a real estate broker. n) Authority. - "Authority" shall mean the National Housing Authority. TITLE II- REGISTRATION AND LICENSE TO SELL SECTION 3. National Housing Authority. - The National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree. SECTION 4. Registration of Projects. - The registered owner of a parcel of land who wishes to convert the same onto a subdivision project shall submit plan to the Authority which shall act upon and approve the same, upon finding that the plan complies with the Subdivision Standards and Regulations enforceable at the time case of a plan for a condominium project except that, in addition, said Authority shall act upon and approve the plan with respect to the building or buildings included in the condominium project in accordance with the National Building Code (R.A No. 6541). The subdivision plan, as so approved, shall then be submitted to the Director of Lands for approval in accordance with the procedure prescribed in Section 44 of the Land Registration Act (Act No. 496, as amended by R.A. No. 440); Provided, that the CASE OF COMPLES SUBDIVISION PLANS, COURT APPROVAL SHALL NO LONGER BE REQUIRED. The condominium plan, as likewise so approved, shall be submitted to the Register of 84

Deeds of the province or city in which the property lies and the same shall be acted upon subject to the conditions and in accordance with the procedure prescribed in Section 4 of the Condominium Act (R.A. No. 4726). The owner or the real estate dealer interested in the sale of lots or units, respectively, in such subdivision project or condominium project shall register the project with the Authority filing therewith a sworn registration statement containing following information: a) Name of the owner; b) The location of the owner's principal business office, and if the owner is a non-resident Filipino, the name and address of his agent or representative in the Philippines authorized to receive notice; c) The names and address of all the directors and officers of the business firm, if the owners be a corporation, association, trust, or other entity, and of all the partners, if it be a partnership; d) The general character of the business actually transacted or to be transacted by the owner; and e) A statement of the capitalization of the owner, including the authorized and outstanding amounts of capital stock and the proportion thereof with is paid-up. The following documents shall be attached to the registration statement: a) A copy of the subdivision plan or condominium plan as approved in accordance with the first and second paragraph of this section. b) A copy of any circular, prospectus, brochure, advertisement, letter, or communication to be used for the public offering of the subdivision lots or condominium units; c) In case of a business firm, a balance sheet showing the amount and general character of its assets and liabilities and a copy of its articles of incorporation or articles of partnership or association, and the case may be, with all the amendments thereof and existing by-laws or instruments corresponding thereto. d) A title to the property which is free from all liens encumbrances; Provided, however, that in case any subdivision lot or condominium unit is mortgage, it is sufficient if the instrument of mortgage contains a stipulation that the mortgagee shall release the mortgage on any subdivision lot or condominium unit as soon as the full purchase price of the same paid by the buyer. The person filing the registration statement shall pay the registration fees prescribed thereof by the Authority. Thereupon, the Authority shall immediately cause to be published a notice of the filing of the registration statement at the expense of the applicant-owner or dealer, in two newspapers of general circulation, one published in English and other in Pilipino, once a week for two consecutive weeks, reciting that a registration statement for the subdivision lots or condominium units has been filed in the National Housing Authority; that the aforesaid registration statement, as well as the prepare attached thereto, are open to inspection during business hours by interested [arties, under such regulations as the Authority may impose, and that copies thereof shall be furnished to any party upon payment of the proper fees. The subdivision project or the condominium project shall be deemed registered upon completion of the above publication requirement. The fact of such registration shall be evidenced by a registration certificate to be issued to the applicant-owner or dealer. SECTION 5. License to Sell. - Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project. The authority, upon proper application thereof, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent. SECTION 6. Performance Bond. - No license to sell subdivision lots or condominium units shall be issued by the Authority under Section 5 of this Decree unless the owner or dealer shall have file an adequate performance bond approved by said Authority to guarantee the construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting system, and full development of the subdivision laws and rules and regulations. The performance bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purpose of its undertaking in case of forfeiture as provided in this Decree. SECTION 7. Exempt Transactions. - A license to sell and performance bond shall not be required in any following transactions: a) Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs. b) Sale or transfer of a subdivision lot by the original purchase thereof and any subsequent sale of the same lot. c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgage in the ordinary course of business when necessary to liquidate a bonafade debt.

85

SECTION 8. Suspension of License to Sell. - Upon verified complaint filed by a buyer of a subdivision lot or a condominium unit or any interested party, the Authority may, in its discretion, immediately suspend the owner's or dealer's license to sell pending investigation and hearing of the case as provided in Section 13 hereof. The Authority may motu propio suspend the license to sell if, in its opinion, any information in the registration statement filed by the owner or dealer is or has become misleading, incorrect, inadequate or incomplete or the sale or offering for sale of the subdivision or condominium project may work or tend to work a fraud upon prospective buyers. The suspension order may lifted if, after notice and hearing, the Authority is convinced that the registration statement is accurate or that any deficiency therein has been corrected or supplemented or that the sale to the public of the subdivision or condominium project will neither be fraudulent nor result in fraud. It shall also be lifted upon dismissal of the complaint for lack of legal basis. Until the final entry of an order of suspension, the suspension of the right to sell project, though binding upon all persons notified therefor, shall be deemed confidential unless it shall appear that the order of suspension has in the meantime been violated. SECTION 9. Revolution of Registration Certificate and License to Sell. - The Authority may, motu propio or upon verified complaint filed by a buyer of a subdivision lot or condominium unit, revoke the registration of any subdivision project or condominium project and the license to sell any subdivision lot or condominium unit in said project by issuing an order to this effect, with his finding in respect thereto, if upon examination into the affairs of the owner or dealer during hearing as provided for in Section 14 hereof, it shall appear there is satisfactory evidence that the said owner or dealer: a) is insolvent: or b) has violated any of the provisions of this Decree or any applicable rule or regulation of the Authority, or any undertaking of his/its performance bond; or c) has been or is engaged or is about to engage in fraudulent transactions; or d) has been made any misrepresentation in any prospectus, brochure, circular or other literature about the subdivision project or condominium project that has been distributed to prospective buyers; or e) is of bad business repute; or f) does not conduct his business in accordance with the law or sound business principles. Where the owner or dealer is a partnership or corporation or an unincorporated association, it shall be sufficient cause for cancellation of its registration certificate and its license to sell if any member of such partnership or any officer or director of such corporation or association has been guilty of any act or omission which would be cause for refusing or revoke the registration of an individual dealer, broker or salesman as provided in Section 11 hereof. SECTION 10. Registers of Subdivision Lots and Condominium Units. - A record of subdivision lots and condominium units shall kept in the Authority wherein shall be entered all orders of the Authority affecting the condition or status thereof. The registers of subdivision lots and condominium units shall be open to public inspection subject to such reasonable rules as the Authority may prescribe. TITLE III - DEALERS, BROKERS AND SALESMEN SECTION 11. Registration of Dealers, Brokers and Salesman. - No real estate dealer broker or salesman shall engage in the business of selling subdivision lots or condominium units unless he has registered himself with Authority in accordance with the provisions of this section. If the Authority shall find that the applicant is good repute and has complied with the application rules of the Authority, including the payment of the prescribed fee, he shall register such applicant a s a dealer, broker or salesman upon his filing a bond, or other security in lieu thereof, in such sum as may be fixed by the Authority conditioned upon his compliance with the provisions of this Decree, Provided, that the registration of a salesman shall case upon the termination of his employment with a dealer broker. Every registration under section shall expire on the thirty-first day of December of each year. Renewal of registration for the succeeding year shall be granted upon the written application therefore made not less than thirty nor more than sixty days before the first day of the ensuing year and upon payment of the prescribed fee, without the necessity of filing further statements or information, unless specifically required by the Authority. All applications filed beyond said period shall be treated as original applications. The names and addresses of all persons registered as dealers, brokers, or salesmen shall be recorded in a Register or Brokers. Dealers and Salesmen kept in the Authority which shall be open to public inspection. SECTION 12. Revocation of Registration as Dealer, Brokers or Salesmen. - Registration under the preceding section may be refused or any registration granted thereunder, revoked by the Authority if, after reasonable notice and hearing, it shall determine that such application or registrant: a) Has violated any provisions of this Decree or any rule or regulation made hereunder; or 86

b) c)

Has made a material false statement in his application for registration; or Has been guilty of a fraudulent act in connection with any sale of a subdivision lor or condominium unit; or d) Has demonstrated his unworthiness to transact the business of dealer, broker, or salesman, as the case may be. In case of charges against a salesman, notice thereof shall also be given the broker or dealer employing such salesman. Pending hearing of the case, the Authority shall have the power to order the suspension of the dealer's, broker's or salesman's registration; provided, that such order shall state the cause for the suspension. The suspension or revocation of the registration of a dealer or broker shall carry with it the suspension or revocation of the registration; provided that such order shall state the cause for the suspension. TITLE IV - PROCEDURE FOR REVOCATION OF REGISTRATION CERTIFICATE SECTION 13. Hearing. - In the hearing for determining the existence of any ground or grounds for the suspension and/or revocation of registration certificate and license to sell as provided in Section 8 and 9 hereof, the following shall be complied with: a) Notice. - No such hearing shall proceed unless the respondent is furnished with a copy of the complaint against him or is writing of the purpose of such hearing. b) Venue. - The hearing may be held before the officer or officers designed by the Authority on the date and place specified in the notice. c) Nature of proceedings. - The proceedings shall be non-litigious and summary in nature without regard to legal technicalities obtaining in courts of law. The Rules of Court shall not apply in said hearing except by analogy or in a suppletory character and whenever practicable and convenient. d) Power incidental to the hearings. - For the purpose of the hearing or other proceeding under this Decree, the officer or officers designated to hear the complaint shall have the power to administer oath, subpoena witnesses conduct ocular inspections, take depositions, and require the production of any book, paper, correspondence, memorandum or other record which are deemed relevant or material to the inquiry. SECTION14. Contempt. a) Direct Contempt. - The officer of officers designed by the Authority to hear the complaint may summarily adjudge in direct contempt any person guilty or misbehavior in the presence of or so near the said hearing officials as to obstruct or interrupt the proceedings before the same or of refusal to be sworn or to answer as a witness or to subscribe an affidavit or disposition when lawfully required to do so. The person found guilty of direct contempt under this section shall be punished by a fine not exceeding Fifty Pesos (P50.00) or imprisonment not exceeding five (5) days, or both. b) Indirect Contempt. - The officer or officers designed to hear the complaint may also adjudge any person in indirect contempt on grounds and in manner prescribed in Rule 71 of the Revised Rules of Court. SECTION 15. Decision. - The case shall be decided within thirty (30) days from the time the same is submitted for decision. The decision may order the revocation of the registration of the subdivision or condominium project, the suspension, cancellation, or revocation of the license to sell and/or the forfeiture, in whole or in part, of the performance bond mentioned in Section 6 hereof. In case forfeiture of the bond is ordered, the Decision may direct the provincial or city engineer to undertake or cause the construction of roads and of other requirements for the subdivision or condominium as stipulated in the bond, chargeable to the amount forfeited. Such decision shall be immediately executor and shall become final after the lapse of 15 days from the date of receipt of the Decision. SECTION 16. Cease and Desist Order. - Whenever it shall appear to the Authority that any person is engaged or about to engage in any act or practice which constitute or will constitute a violation of provision of this Decree, or of any rule or regulation thereunder, it may, upon due notice and hearing as provided in Section 13 hereof, issue a cease and desist order to enjoin such act or practices. SECTION 17. Registration. - All contracts to sell, deeds of sale and other similar instruments relative to the sale of conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated. Whenever a subdivision plan duly approved in accordance with Section 4 hereof, together with the corresponding owner's duplicate certificate of title is presented to the Register of Deeds for registration, the Register of Deeds shall register the same in accordance with the provisions of the Land Registration Act, as amended; Provided, however, that if there is a street, passageway or required open space delineated on a complex subdivision plan hereafter approved and as defined in this Decree, the Register of Deeds shall annotate on the new certificate of title covering the street, passageway of open space, a memorandum lot he effect that except by way of donation in favor of a city or municipality, no portion of any street, passageway or open space so delineated on the plan shall be closed or otherwise disposed of by the registered owner without the requisite approval as provided under Section 22 of this Decree. 87

SECTION 18. Mortgage. - No mortgage of any unit or lot shall be made by the owner or developer without prior written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof. SECTION 19. Advertisement. - Advertisement that may be made by the owner or developer through newspaper, radio, television, leaflets, circulars or any other form about the subdivision or the condominium or its operations activities must reflect the real facts and must be presented in such manner that will not tend mislead or deceive the public. The owner or developer shall be answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or development or his agents and the same shall form part of the sales warranties enforceable against said owner of developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree. SECTION 20. Time of Completion. - Every owner or developer shall construct and provided the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approval subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisements, within one year from the date of the issuance of the license for the subdivision or condominium project or such period of time as may be fixed by the Authority. SECTION 21. Sales Prior to Decree. - In case of subdivision lots or condominium units sold or disposed of prior to the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium project to complete compliance with his or its obligations as provided in the preceding section within two years from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond is filed in accordance with Section 6 hereof. Failure of the owner of developer to comply with the obligation under this and the preceding provisions shall constitute a violation punishable under Section 38 and 39 of this Decree. SECTION 22. Alteration of Plans. - No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and/or other form of subdivision developments as contained in the approved subdivision plan and/or represented in its advertisements, without the permission of the Authority and the written conformity or consent of the duly organized homeowner's association or in the absence of the latter by the majority of the lot buyers in the subdivision. SECTION 23. Non-Forfeiture of Payments. - No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approval plans and within the time for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but including delinquency interests, with interest thereon at the legal rate. SECTION 24. Failure to pay installments. - The rights of the buyer in the event of his failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall governed by Republic Act No. 6552. Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to be corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary. SECTION 25. Issuance of Title. - The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith. SECTION 26. Realty Tax. - Real estate tax and assessment on a lot or unit shall be paid by the owner or developer without recourse to the buyer for as long as the title has not passed to the buyer; Provided, however, that if the buyer has actually taken possession of the occupied the lot or unit; he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy. SECTION 27. Other Charges. - No owner or developer shall levy upon any lot or unit buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowner's association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project. SECTION 28. Access to Public Offices in the Subdivision. - No owner or developer shall deny any person free access to any government office or public establishment located within the subdivision or which may be reached only by passing through the subdivision. 88

SECTION 29. Right of Way to Public Road. - The owner or developer of a subdivision without access to any existing public road or street, must secure a right of way to public road or street and such right of way must be developed and maintained according to the requirement of the government authorities concerned. SECTION 30. Organization of Homeowner's Association. - The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowner's association among the buyers and residents of the project for the purpose of promoting and protecting their mutual interest and assist in their community development. SECTION 31. Donation of Roads and Open Spaces to Local Government. - The registered owner or developer of the subdivision or condominium project, upon completion of the development of said project may, at his option, convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the projects are located. Upon acceptance of the donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless after hearing, the proposed conversion is approved by the Authority. SECTION 32. Phases of Subdivision. - For purpose of complying with the provisions of this Decree, the owner or developer may divide the development and sale of the subdivision into phases, each phase to cover not less than ten (10) hectares. The requirement imposed by the Decree on the subdivision as a whole shall be deemed imposed by phase. SECTION 33. Nullity of Waivers. - Any condition, stipulation, or provision in a contract of sale whereby any person waives compliance with any provisions of this Decree or of any rule or regulation issued thereunder shall be void. SECTION 34. Visitorial Powers. - This Authority, through its duly authorized representative may, at any time, make an examination into the business affairs, administration, and condition of any person, corporation, partnership, cooperative, or association engaged in the business of selling subdivision lots and condominium units. For this purpose, the official authorized to do so shall have the authority to examine under oath the directors, officers, stockholders or members of any corporation, partnership, association, cooperative or other persons associated or connected or with the business and to issue subpoena or subpoena duces tecum in relation to any investigation that may arise thereform. The Authority may also authorize the Provincial City or Municipal Engineer, as the case may be, to conduct an ocular inspection of the project to determine whether the development of said project conform to standards and specifications prescribed by the government. The books, papers, letters, and other documents belonging to the person or entities herein mentioned shall be open to inspection by the Authority or its duly authorized representative. SECTION 35. Tke-over-Development. - The Authority may take over or cause the development and completion of the subdivision or condominium project at the expense of the owner or developer, jointly or severally, in case where the owner or developer has refused or failed to develop or complete the development of the Project as provided for in this Decree. The Authority may, after such take-over, demand, collect and receive from the buyers the installment payments due on the lots, which shall be utilized for the development of the subdivision. SECTION 36. Rules and Regulations. - The Authority shall issue the necessary standards, rules and regulations for the effective implementation of the provisions of this decree. Such standards, rules and regulations shall take effect immediately after their publication three times a week for two consecutive weeks in any newspaper of general circulation. SECTION 37. Deputization of Law Enforcement Agencies. - The Authority may deputize the Philippine Constabulary or any law enforcement agency in the execution of its final orders rulings or decisions. SECTION 38. Administrative Fines. - The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or of any rule or regulations thereunder. Fines shall be payable to the Authority and enforceable through writs or execution in accordance with the provisions of the Rules of Court. SECTION 39. Penalties. - Any person who shall violate any of the provisions of this Decree and/or any rule or regulation that may issued pursuant ti this Decree shall, upon conviction of not more than ten (10) years; provided, that in the case of corporations, partnerships, cooperatives or associations, the President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto. SECTION 40. Liability of Controlling Persons. - Every person who directly or indirectly controls any person liable under any provision of this Decree or of any rule or regulation issued thereunder shall be liable jointly and severally with and to the same extent as such controlled person unless the controlling person acted in good faith and did not directly induce the act or acts constituting the violation or cause of action. SECTION 41. Other Remedies. - The rights and remedies provided in this Decree shall be in addition to any and all other rights and remedies that may be available under existing laws. SECTION 42. Repealing Clause. - All laws, executive orders, rules and regulations, or parts thereof inconsistent with the provisions of this Decree are hereby repealed or modified accordingly. SECTION 43. Effictivity. - This Decree shall take upon its approval. [July 12, 1976] 89

HLURB and FUNCTIONS HLURB in Retrospect The housing and Land Use Regulatory Board (HLURB) is a national government agency tasked as the planning, regulatory and quasi-judicial body for land use development and real estate and housing regulation. These roles are done via a triad of strategies namely, policy development, planning and regulation. History  Executive Order No. 419 (1973) created the Tax Force on Human Settlements (TFHS) under the Development Academy of the Philippines (DAP) Presidential Decree No. 933 (1976) renamed the TFHS into Human Settlements Commission (HSC).  Presidential Decree No. 1396 (1978) renamed HSC as the Human Settlements Regulatory Commission (HSRC) and was designated as the regulatory arm of the Ministry of Settlements.  Executive Order No. 648 (1981) reorganized the HSRC and transferred the implementation of P.D. No. 957 (Subdivision and Condominium Buyer's Protective Decree) from NHA to HSRC.  Executive Order No. 90 (1986) renamed the HSRC as the Housing and Land Use Regulatory Board (HLURB) and was designed as the regulatory body for housing and land development under the Housing and Urban Development Coordinating Council (HUDCC). Mandates LAND USE PLANNING Laws that Ensure Rational Land Use and Sustainable Urban and Regional Development  Executive Order No. 72 - Providing for the Preparation and Implementation of the Comprehensive Land Use Plans of Local Government Units Pursuant to the Local Government Code of 1991 and Other Pertinent Laws  Memorandum Circular No. 54 - Prescribing the Guidelines of Sec. 20 R.A. 7160, Authorizing Cities/Municipalities to Reclassify Lands into Non-Agricultural Uses  Executive Order No. 124 - Establishing Priorities and Procedures in Evaluating Areas for Land Conversion in Regional Agricultural/Industrial Centers, Tourism Development Areas Sites for Socialized Housing REAL ESTATE MANAGEMENT Laws that Regulate the Relationship between Sellers, Developers and Buyers of Subdivision Lots and Condominium Units, and provide Quasi-Judicial and Criminal Remedies for Breach of Statutory and Contractual Obligations  Subdivision and Condominium Buyer's Protective Decree Presidential Decree No. 957 (As Amended By P.D. 1216) - Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties For Violations Thereof  Presidential Decree No. 1216 - Defining "Open Space' in Residential Subdivision and Amending Sec. 31 of Pd 957 Requiring Subdivision Owners to Provide Roads, Alleys, Sidewalks and Reserve Open Space for Parks or Recreational Use  Presidential Decree No. 1344 - Empowering the NHA to issue Wit of Execution in the Enforcement of its Decisions Under P.D. 957  Batas Pambansa 220 - An Act Authorizing the Ministry of Human Settlements to Establish and Promulgate Different Levels of Standards and Technical Requirements for Economic and Social Housing Projects in Urban and Rural Areas from Those Provided Under Presidential Decrees Numbered Nine Hundred Fifty- Seven, Twelve Hundred Sixteen, Ten Hundred Ninety-Six and Eleven Hundred EightyFive  Republic Act 7279 - Urban Development and Housing Act. An Act to Provide For a Comprehensive and Continuing Urban Development and Housing Program, Establish the Mechanism for its Implementation, and for Other Purposes  Republic Act 4726 - The Condominium Act. An Act to Define Condominium, Establish Requirements for its Creation, and Govern its Incidents  Republic Act 7899 - Amending Section 4 and 6 of R.A. 4726  Executive Order 71 - Devolution of HLURB Function to Approved Subdivision Plan of LGUS  Executive Order 184 - Creating Socialized Housing One-Stop Processing Centers  Republic Act 6552 - Realty Installment Buyer Protection Act Rational Land Use Planning is the key to order and rational land development in any local government unit, i.e. a city or municipality. A Comprehensive Land Use Plan (CLUP) prescribes the developmental pace, directions and strategies for the optimum use of land resources in a community as well as its role in provincial, regional and national development. The CLUP is enacted into a zoning ordinance for purposes of enforcement. 90

Development Role HLURB has the twin roles of enhancing and reinforcing rational housing and real estate service delivery via triad of strategies namely; policy, planning, and regulation. Such rules are enunciated and defined in Presidential Decree (PD), Letters of Instruction (LOI), Republic Acts (RA), Executive Orders (EO), Office of the President Memorandum Circulars (OP-MC) and Batas Pambansa (BP). The HLURB pursues activities to attain rational land use as specified in a number of directives.  Extend planning assistance to Local Government Units (LGUs) (LOI No. 729, EO No. 648);  Review and ratify land use plans of Metro Manila cities and municipalities, provinces, highly urbanized cities and independent component cities (EO No. 72);  Enforce zoning regulations (EO No. 648);  Investigate and adjudicate complaints (EO No. 648)  Assist local government units assume devolved functions via training and consultation;  Coordinate land reclassification clearance (MC No. 54);  Update and revise rules, guidelines and standards on land use (EO No. 648); and  Update and revise National Urban Development and Housing Framework (RA No. 7279). On Real Estate and Housing Regulations The HLURB functions are specified in various directions:  Enforce laws, rules, standards and guidelines through: o Approval of condominium plans (PD No. 957); o Subdivision Plans: HLURB's foremost function is to protect buyers of housing units and home lots, and condominium units unscrupulous practices in the industry; and  Issuance of License to Sell (PD No. 957)  Assist LGU's perform the devolved function of processing and approving the subdivision plans via training and consultation (EO No. 71) o Issue sales and mortgage clearance for the protection of rights of tenants in the urban and land reform zones and areas for priority development (PD No. 1517) o Update and revise rules guidelines and standards on housing and real estate for:



-Residential subdivisions and condominiums (PD No. 957) -Economic and socialized project (BP Blg. 220) Approve expansion of a condominium corporation or integration of a condominium project with another project upon the affirmative vote of a simple majority of registered owners (RA No. 7899)

-Assurance of completion of project (PD No. 957) -Investigation and adjudication of complaints (PD No. 957) -Assurance of compliance to balanced housing development requirement (Sec. 18, R.A. 7279) -Balanced housing development (RA No. 7279) -Other types of subdivision and condominium project (EO No. 648 and related laws)   

Operate as the lead agency for the HUDCC for the Socialized Housing One-stop Processing Centers (SHOPCs) and issuance of permits, clearances, certifications and license for the implementation of socialized housing projects (EO No. 184) Approve any amendment to or revocation of the enabling or master deed of a condominium project already decided upon by a simple majority of all registered owners (RA No. 7899) Approve expansion of a condominium corporation or integration of a condominium project with another upon the affirmative vote of a simple majority of registered owners (RA No. 7899)

Quasi Judicial Functions Quasi-Judicial Functions Designated Housing and Land Use Arbiters (HLAs) at the Central Office, in each of the Regional Offices and for special assignments, hear and decide on complaints against violation of pertinent legislation's and HLURB rules and regulations. The HLURB Rules of Procedures for adjudication of cases provides for just speedy and inexpensive proceedings, amicable settlements, summary resolution and other legal tools. The aggrieved party in a resolved case may file a petition for review or appeal the decision of the HLA to the Board of Commissioners. The decision of the Board is appealed to the Officer of the President which decisions shall be final subject only to review by the Supreme Court. HOA Functions of HLURB In January 2000, Republic Act No. 8763 transferred to this Board the functions of the Home Guaranty Corporation with respect to Homeowners Associations. 91



"The Magna Carta for Homeowners and Homeowners' Associations"

Devolved Functions Pursuant to the prescription of RA No. 7160 (Local Government Code of 1991) and as detailed under EO No. 71 and EO No. 72, certain HLURB functions were devolved to the LGU's:   

The Sangguniang Bayan or Sangguniang Panglungsod shall, subject to national law, process and approve subdivision plans for residential, commercial, industrial or other development purpose. The Sangguniang Panlalawigan shall review and approve the comprehensive land use plans of component cities and municipalities. Cities and municipalities with CLUPs reviewed and approved in accordance with EO 72 shall issue location clearance to locally projects.

CASES NOT UNDER JURISDICTION OF HLURB 1. 2. 3. 4.

Complaints vs. Buyer Complaints vs. Co-Practitioner Complaints vs. Owners [Commissions] Complaints by Developer

92

Subdivision Development SALIENT FEATURES OF PD 957 AND RELATED LAWS HUDCC [HOUSING AND URBAN DEVELOPMENT COORDINATING COUNCIL] The Housing and Urban Development Coordinating Council (HUDCC) was created by then President Corazon C. Aquino by virtue Executive Order No. 90 dated December 1986. The EO, which also abolished the Ministry of Human Settlements, placed HUDCC under the direct supervision of the Office of the President to serve as the highest policy making body for housing and coordinate the activities of the government housing agencies to ensure the accomplishment of the National Shelter Program.

ATTACHED AGENCIES 1. HGC- THE HOME GUARANTY CORPORATION The Home Guaranty Corporation (HGC) is the government-owned-and-controlled-corporation (GOCC) mandated by law (Republic Act 8763) to promote sustainable home ownership by providing risk coverage or Guarantees and tax/fiscal incentives to banks and financial institution/investors granting housing development loans/credits, and home financing. 2. HLURB [Housing Land Use and Regulatory Board] The Housing Land Use and Regulatory Board (HLURB) is a national government agency tasked as the planning regulatory and quasi-judicial body for land use development and real estate and housing regulation. These roles are done via a triad of strategies namely, policy development, planning and regulation. 3. National Housing Authority A National government agency tasked to provide responsive housing programs primarily to homeless low-income families with access to social services and economic opportunities with excellence while ensuring corporate viability. 4. National Home Mortgage Finance Corporation The NHMFC is the major government home mortgage institution. It’s main function is to operate a viable secondary home mortgage market. 5. PAG-IBIG The birth of the Home Development Mutual Fund (HDMF), more popularly known as the Pag-IBIG Fund, was an answer to the need for a national savings program and an affordable shelter financing for the Filipino worker. The Fund was established on 11 June 1978 by virtue of Presidential Decree No. 1530 primarily to address these two basic yet equally important needs. Under the said law, there were two agencies that administered the Fund. The Social Security System handled the funds of private employees, while the government Service Insurance System handled the savings of government workers.   

To provide and maintain adequate housing for the greatest possible number of people. To undertake housing development, resettlement or other activities that would enhance the provision of housing to very Filipino. To harness and promote private participation in housing ventures in terms of capital expenditures, and, expertise, financing and other facilities for the sustained growth of the housing industry.

6. Social Housing Finance Corporation The lead financial institution that develops and implements social housing programs of the country. 93

 

To uplift housing conditions of marginalized Filipinos by providing access to affordable shelter industry. To continuously administer, promote and enhance the Community Mortgage Program and the Abot-kaya Pabahay Fund Program.

Principles and Concepts of Planning, Land Use Planning and Zoning HISTORICAL BACKGROUND OF THE HOUSING AND LAND USE REGULATORY BOARD 1. Task Force on Human Settlement (TFHS) Executive Order No. 419 (9/19/73) 2. Human Settlements Commission (HSC) Presidential Decree No. 933 (5/13/76) 3. Human Settlements Regulatory Commission (HSRC) Presidential Decree No. 1396 (6/02/78)

Executive Order No. 648 (2/07/81)  reorganized the HSRC and;  Transferred the implementation of P. D. No. 957 (Subdivision and Condominium Buyer’s Protective Decree) from NHA to HSRC. Housing and Land Use Regulatory Board (HLURB) Executive Order No. 90 (12/17/86):  renamed the HSRC as the Housing & Land Use Regulatory Board (HLURB) and;  designated as the sole regulatory body for housing and land development Section 26 of RA No. 8763 – transferred to HLURB, the powers, authorities and responsibilities vested in the HIGC, now HGC with respect to association (Homeowners Association) under RA No. 580 as amended by E.O. 535 series of 1979

HLURB DO:     

Issue Development Permits (DPs) and Licenses to Sell (LS) to Condominium Projects Register and Issue License to Sell to Subdivision Projects Register and Supervise Homeowners Associations Monitor Land Development Projects Conduct Mediation Proceedings Hear & Decide Cases Assist Local Government Units in the Preparation of Comprehensive Land Use Plans and Zoning Ordinances  Issue Policies and Guidelines On Land Development Projects, Zoning and Homeowners Associations HLURB DON'T DO:      

Ejectment Cases Right of Way Develop Subdivisions Sell Subdivisions Extend Loans Cases Between Neighbors

DEFINITIONS: Planning 1. Planning is a process for determining appropriate future action through a sequence of choices. (Davidoff and Reiner; 1973:11) 2. Planning is a rational allocation of resources with alternative uses in order to achieve common end. (Hilhorst; 1978: 2.24)

94

3. Planning is a process of preparing a set of decisions for action in the future, directed at achieving goals by preferable means. (Dror; 1973:330) 4. Planning is deciding in advance what is to be done and how. It involves selecting objectives and developing policies, programs, and procedures for achieving them. (Kast) Planning is something we do in advance of taking action, that is, it is anticipatory decision-making. It is a process of deciding what to do and how to do it before action is required. (Ackoff; 1920:2) Plan A plan is a coherent whole of facts and figures indicating the most desirable course of events. Plans can be made for all kinds of undertaking – for a holiday, a production process, making of a road. Development Planning Development Planning is a deliberate process of economic and social transformation. Its pace and direction is determined, controlled and regulated. It usually signifies government direction, of economic activity by thinking ahead, coordinating various economic and social factors and attaining deliberate objectives. LAND USE PLANNING CONCEPTS LAND is viewed as a shared natural resource, much like air and water found therein, to be conserved and cared for with due regard for its effect on society as a whole and for the conditions in which it will be passed on to future generations. LAND is also viewed as property – a private commodity which can be owned, used, bought or sold for personal comfort and profit. LAND USE PLANNING refers to the rational and judicious development, utilization and management of land resources in a sustainable manner to ensure that the needs of the present generation can be met without jeopardizing the needs of the future generations. OBJECTIVES OF LAND USE PLANNING  To promote the efficient utilization, acquisition and disposition of land and ensure the highest and best use of land;  To direct, harmonize and influence discussions and activities of the private and public sectors relative to the use and management of land;  To reconcile land use conflicts and proposals between and among individuals, private and government entities relative to the present and future need for land;  To promote desirable patterns of land uses to prevent wasteful development and minimize the cost of public infrastructure and utilities and other social services;  To conserve areas of ecological, aesthetic, historical and cultural significance IMPORTANCE OF LAND USE PLANNING  It is a tool to guide the use and re-use of land, prevent the abuse and non-use of land and correct the misuse of land.  It is needed to optimize the use of both public and private land and to assist in resolving possible conflicts that may arise from competition for a share of the LGUs limited land resource arising from the continuous increase in population and development requirements.  Appropriate or rational land use planning that adheres to the principles of sustainable development cause positive effects on the social, political, economic, physical and environmental forces. DIMENSIONS OF LAND USE PLANNING  Technical aspect – involves determining what activities (agricultural, construction) a given piece of land can support without causing damage to the land itself in order that it can be used across many generations without jeopardizing, but in fact, enhancing the value.  Political aspect – concerned with the commitment of decision makers and politicians to ensure that there is strict compliance with the plan and its implementation tools 95

Land Use Planning is essentially a government function in view of the principle that land should be used for the common good. When government undertakes land use planning, it undertakes a wide range of activities which include, but are not limited to:  indicating the best possible uses of a piece of land based on studies undertaken, (e.g. land evaluation or land suitability studies) but leaving the decision to individual land owners.  pinpointing locations or delineating areas where certain activities may or may not be undertaken.  Prescribing certain parameters and standards for implementing development activities (e.g. subdivision and building code, pollution standards. ACTIVITIES OF LAND USE PLANNING  GENERAL LAND USE PLANNING (Municipal-Wide) deals with primarily with the nonurban large-scale uses such as; croplands, forests, pasture land, mining/quarrying areas and swamplands.  URBAN LAND USE PLANNING is concerned with the location, intensity and amount of land development required for the various space-using functions such as residential, commercial, industrial, institutional, recreation and other activities found in the urban areas. It is concerned with the proper allocation of land areas for these urban uses based on soil suitabilities, prescribed space standards and various land allocation criteria such as site and accessibility standards and land use compatibility considerations. ASPECTS OF LAND USE PLANNING  EXISTING LAND USES Existing General Land Use – reflects the existing distribution of land uses covering the entire municipality on a certain period of time. Existing Urban Land Uses – reflects the existing distribution of land uses within the identified urban zone (Poblacion and rural barangays) on a certain period of time.  LAND USE PLAN (PROPOSED LAND USES) General Land Use Plan – reflects the planned distribution of land uses of the entire municipality on a certain period of time. Urban Land Use Plan – reflects the planned distribution of urban land uses (Poblacion and rural barangays) on a certain period of time. LAND USE CATEGORIES             

Urban Use Areas Residential Commercial Infrastructure/Utilities Institutional Parks/Playgrounds and other recreational spaces Industrial Agriculture Forest and forest use categories Mining/Quarrying Grassland/Pasture Agro-Industrial Tourism

 Other uses/categories       

Cemeteries Sanitary Landfills Buffer Zones/Greenbelts Idle/Vacant lands Reclamations Water uses Nipa Swamps 96

       

Mangrove Forests Tourism (Recreation/Resorts) Settlements on stilts Infrastructure (e.g. Ports and Harbors, Fish Landing, Oil Pipelines Aquaculture and marine culture ( e.g. fish cages/fish pens, sea weed culture, etc. Fish Sanctuary Mudflats Others, specify (e.g. river sand/gravel quarrying, coral reef, seagrass beds

PHYSICAL FEATURES/ENVIRONMENT  Geographic Location-Determine the geographic location of the city/municipality by indicating the boundaries in the north, east, west and south and the latitudinal and longitudinal coordinates. A VICINITY MAP is needed as a tool for analyzing the influence and limitation of the planning area.  Climate – Determine the type of climate, the prevailing rainfall and the wind direction of the municipality. A CLIMATE MAP, RAINFALL CHART and WIND DIRECTION MAP are needed.  Topography – Study the types of reliefs present (e.g. mountains, hilltops, valleys, plains, depressions) the location of each type (whether in the northern or western portions and the specific barangays covered); and the area covered (in hectares and percentage to total land area of the city/municipality).The TOPOGRAPHIC MAP is useful in the initial appreciation of the potentials and limitations of land development  Slope- Study the slope percentage (e.g. 0-3%. 3-0%, 8-15% and 18% and over) and the area of each slope category in the whole municipality. The SLOPE MAP shows the degree of inclination of a given area.  Soil – Study the types of soil present in the locality using the Land Classification Guide and other relevant information from the Bureau of Soils and Water Management. Determine the area per soil type. The characteristics of each soil type indicate the kind of use that is best suited to it. The SOIL MAP shows the different soil classification units found in a given area.  Land Capability – The LAND CAPABILITY MAP indicates the suitability of areas for cultivation according to soil conservation management requirements. Factors considered in the identification of land capability classes are soil erosion potentials/flooding and soil condition limitations.  Development Constraints  Geology – The GEOLOGY MAP determines the presence of fault zones, and types of bedrock formation.  Erosion Potentials – The EROSION POTENTIALS MAP shows the degree of susceptibility to erosion of an area. The erosion potential of any area is primarily dependent on the soil type, slope, type of vegetation and the intensity of rainfall.  Flooding Hazards – The FLOODING HAZARDS MAP reflects the areas subject to flooding.  Surface Drainage – The SURFACE DRAINAGE MAP shows the location of surface water such as lakes, rivers and their tributaries and other water bodies on the earth surface. COMPREHENSIVE LAND USE PLAN The COMPREHENSIVE LAND USE PLAN (CLUP) refers to a document embodying specific proposals for guiding, regulating and development of a city or municipality. It is comprehensive because it considers all sectors significant in the development process.

COMPONENTS OF A COMPREHENSIVE LAND USE PLAN (CLUP): 1. DEMOGRAPHY 2. PHYSICAL/ENVIRONMENT 3. LAND USE 97

4.

5.

6.

7.

 Existing  Plan SOCIAL SECTOR  Housing  Health  Education  Protective Services  Sports and Recreation  Social Welfare ECONOMIC SECTOR  Industry  Commerce and Trade  Agriculture  Forestry  Tourism INFRASTRUCTURE AND UTILITIES SECTOR o Transportation o Power o Water o Communication o Solid Waste Management LOCAL ADMINISTRATION SECTOR o Local Government Organization/Structure o Local Government Finance

GUIDELINES ON MAPPING AND WRITE-UPS OF ZONE BOUNDARIES:  

The ZONING ORDINANCE implements the Comprehensive Land Use Plan. Without the ZONING ORDINANCE, the CLUP cannot be implemented. Because of this, the ZONING MAP should be the same as the LAND USE PLAN MAP/S. The ZONING BOUNDARIES as provided for in Section 7, Article IV of the ZONING ORDINANCE describes each block (residential/commercial/institutional/industrial, etc.) individually.

The following sample shows how to describe the locations and boundaries of the various zone into which the city/ municipality has been divided. ZONE

LOCATION

GRB-1

BOUNDED ON THE NORTH BY GOMEZ STREET BOUNDED ON THE EAST BY CRUZ STREET BOUNDED ON THE SOUTH BY LEDESMA STREET BOUNDED ON THE WEST BY PONCE STREET

GCB-1

BOUNDED ON THE NORTHEAST BY WAWA RIVER BOUNDED ON THE SOUTHEAST BY MACARTHUR HIGHWAY BOUNDED ON THE SOUTHWEST BY GARCIA STREET BOUNDED ON THE NORTHWEST BY ROXAS BLVD.

As said the ZONING MAPS and the LAND USE PLANS MAPS are the same. The only difference between the ZONING MAPS and the LAND USE PLANS MAPS, is that the ZONING MAPS are NUMBERED PER BLOCK, whereas the LAND USE MAPS are not. In addition, the ZONING MAPS reflect whether the zones are divided into the low/medium or high density. (e.g. R1, R2, or R3 for residential, or C1, C2, or C3 for commercial.

CLASSIFICATION BY DENSITY 98

R1 – districts permit only single family detached houses. (3 storeys and below) R2 – districts permit only buildings and structures for human occupancy with a density of twenty-one (21) to sixty-five (65) dwellings units per hectare. (4 to 7 storeys) R3 – districts permit only buildings and structures for human occupancy with a density of sixty-six (66) or more dwelling units per hectare. (8 or more storeys) C1 – districts accommodate the retail and personal services shops needed in residential neighborhood. Clustered retail development is clustered in the Central Business District. C2- districts allow a wider range of local retail and service establishments than C1 and are intended to serve a wider neighborhood. C3 – districts are zoned for regional shopping centers such as large malls and other large commercial activities which are regional in scope or whose market activities generate traffic and requires utilities and services that extend beyond local boundaries.

LAND USE PLANNING AND ZONING: LAND USE PLANNING AND ZONING ARE SYNONYMOUS AND INTERCHANGEABLE TERMS POSTULATE 1. LAND USE PLANNING IS GENERAL IN SCOPE POSTULATE 2. ZONING IS ONLY A PRODUCT OF THE FORMER LAND USE PLANNING, IN GENERAL _IDENTIFIES: THE WHAT WHERE OF LAND DEVELOPMENT/USES/ACTIVITIES HOW BASED ON: 1.STUDIES 2.OBJECTIVES OR 3.GOALS ZONING IS A TOOL TO IMPLEMENT LAND USE /DEVELOPMENT PLAN ZONING ORDINANCE (ZO) AS LOCAL LAW TO ENFORCE APPROVED LAND USE/DEVELOPMENT PLAN LAND USE PLAN UNDER HLURB MANDATE REFERS SPECIFICALLY TO COMPREHENSIVE LAND USE PLANS (CLUP) CLUP NOT SELF EXECUTORY ENFORCED THROUGH ZONING ORDINANCE THE ZO BASICALLY PROVIDES ADJUDICATORY AND APPEAL MECHANISMS AS REMEDIES FOR AGGRIEVED PARTIES FOR BASIC WORKING IDEA OF THESE MECHANISM REFER TO HLURB MODEL ZONING ORDINANCE (ART. X, SECS. 45-46

99

Urban and Rural Land Use Republic Act No. 7279 AN ACT TO PROVIDE FOR A COMPREHENSIVE AND CONTINUING URAN DEVELOPMENT AND HOUSING PROGRAM, ESTABLISH THE MECHANISM FOR IT S IMPLEMENTATION, AND FOR OTHER PURPOSES ARTICLE 1

TITLE, POLICY, PROGRAM AND DEFINITION OF TERMS Section 1. Title – This Act shall be known as the “Urban Development and Housing Act of 1992 “ Section 2. Declaration of State Policy and Program Objectives – It shall be the policy of the State to undertake, in cooperation with the private sector, a comprehensive and continuing Urban Development and Housing Program, hereinafter referred to as the Program, which shall : a) Uplift the conditions of the privileged and homeless citizens in urban areas and in resettlement areas by making available to them decent housing at affordable cost, basic services, and employment opportunities; b) Provide for the rational use an d development of urban land in order to bring about the following: (1) Equitable utilization of residential lands in urban and urbanizable areas with particular attention to the needs and requirements of the privileged and homeless citizens and not merely on the basis of market forces; (2) Optimization of the use and productivity of land and urban resources; (3) Development of urban areas conducive to commercial and industrial activities which can generate more economic opportunities for the people; (4) Reduction in urban dysfunctions, particularly those that adversely affect public health safety and ecology; and (5) Access to land and housing by the underprivileged and homeless citizens. c) Adopt workable policies to regulate and direct urban growth and expansion towards a dispersed urban net and more balanced urban-rural interdependence; d) Provide for an equitable land tenure system that shall guarantee security of tenure to Program beneficiaries but shall respect the rights of small property owners and ensure the payment of just compensation; e) Encourage more effective people’s participation in the urban development process; and f) Improve the capability of local government units in undertaking urban development and housing programs and projects. Section 3. Definition of Terms – For purposes of this Act: a) “ Affordable Cost “ refers to the most reasonable price of land and shelter based on the needs and financial capability of Program beneficiaries and appropriate financing schemes; b) “ Areas for priority development “ refers to those declared as much under existing status and pertinent executive issuances; c) “Blighted Areas” refers to the areas where the structures are dilapidated, obsolete, and unsanitary, tending to depreciate the value of the land and prevent normal development and use of the area; d) “ Consultation “ refers to the constitutionally mandated process whereby the public on their own or through people’s organizations, is provided an opportunity to be heard and to participate in the decisionmaking process on matters involving the protection and promotion of its legitimate collective interests, which shall include appropriate documentation and feedback mechanisms; e) “Idle Lands” refers to non-agricultural lands in urban and urbanizable areas on which no improvements, as herein defined, have been made by the owner, as certified by the city, municipal or provincial assessor f) “Improvements” refers to all types of buildings and residential units, walls, fences, structures or construction of all kinds of a foxed character or which are adhered to the soil but shall not include trees, plants and growing fruits, and other fixtures that are mere superimpositions on the land, and the value of improvements shall not be less that fifty percent ( 50%) of the assessed value of the property; g) “Joint Venture” refers to the commitment or agreement by (2) or more persons to carry out a specific or simple business enterprise for their mutual benefit, for which purpose they combine their funds, land resource, facilities and services; 100

h) “ Land assembly or consolidation” refers to the acquisition of lots or varying ownership through purchase or expropriation for the purpose of planned and national development and socialized housing programs without individual property boundary restrictions; i)

“Land Banking” refers to the acquisition of at values based on existing use in advance of actual need to promote planned development and socialized housing programs;

j)

“Land Swapping” refers to the process of land acquisition by exchanging land for another piece of land of equal value, or for shares of stock in a government or quasi-government corporation whose book value is of equal value to the land being exchanged, for the purpose of planned and national development and provision for socialized housing where land values are determined based on land classification, market value and assessed value taken from existing tax declarations; Provided, That more valuable lands owned by private persons may exchanged with less valuable lands to carry out the objectives of this Act;

k) “Land use plan” refers to the rational approach of allocating available land resources as equitably as possible among competing user groups and for different functions consistent with the development plan area and the Program under this Act; l)

“On-site development” refers to the process of upgrading and rehabilitation of heighted and slum urban areas with a view of minimizing displacement of dwellers in said areas, and with provisions for basic services as provided for in Section 21 hereof;

m) “Professional squatters” refers to individuals or groups who occupy lands without the express consent of the landowner and who have sufficient income for legitimate housing. The term shall also apply to persons who have previously been awarded home lots or housing units by the Government but who sold, leased, or transferred the same to settle illegally in the same place or in another urban area, and non-bona fide occupants and intruders of lands reserved for socialized housing. The term shall not apply to individuals or groups who simply rent land and housing from professional squatters or squatting syndicates; n) “Resettlement areas” refers to areas identified by the appropriate national agency or by the local government unit with respect to areas within its jurisdiction, which shall be used for the relocation of the underprivileged and homeless citizens; o) “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; p) “Slum improvement and Resettlement Program or SIR” refers to the program of the National Housing Authority of upgrading and improving blighted squatter areas outside of Metro Manila pursuant to existing statutes and pertinent executive issuances; q) “Small property owners” refers to those whose only real property consists of residential lands not exceeding three hundred square meters (300 sq. m.) in highly urbanized cities and eight hundred square meters (8000 sq, m,) in other urban cities; r) “Socialized housing” refers to housing programs and projects covering houses and lots or home lots only undertaken by the Government or the private sector for the underprivileged and homeless citizens which shall include sites and services development, long-term financing, liberalized terms on interest payments, and such other benefits in accordance with the provisions of this Act; s) “Squatting syndicates” refers to groups of persons engaged in the business of squatter housing for profit or gain; t)

“Underprivileged and homeless citizens” refers to the beneficiaries of this Act and to individuals or families residing in urban and urbanizable areas whose income or combined household income falls within the poverty threshold as defined by the National Economic and Development Authority and who do not own housing facilities. This shall include those who live in makeshift dwelling units and do not enjoy security of tenures; 101

u) “Unregistered or abandoned lands” refers to lands in urban and urbanizable areas which are not registered with the Register of Deeds, or with the city or municipal assessors office concerned, or which are uninhabited by the owner and have not been developed or devoted for any useful purposes, or appears unutilized for a period of three consecutive years immediately prior to the issuance and receipt or publication of notice of acquisition by the Government as provided under this Act. It does not include land which has been abandoned by reason of force majeure or any fortuitous event; Provided that prior to that event, such land was previously used for some useful or economic purpose; v) “Urban areas” refers to all cities regardless of their population density and to municipalities with a population density of at least five hundred (500) persons per square kilometer; w) “Urbanizable areas” refers to sites and lands which, considering present characteristics and prevailing conditions, display marked and great potential of becoming urban areas within the period of five ( 5 ) years; and x) “Zonal Improvement Program or ZIP “refers to the program of the National Housing Authority of upgrading and improving blighted squatter areas within the cities and municipalities of Metro Manila pursuant to existing statutes and pertinent executive issuances.

ARTICLE II COVERAGE AND EXEPTIONS Section 4, Coverage.- The program shall cover all Lands in urban and urbanizable areas, including existing area for priority development, zonal improvement sites, slum improvement and resettlement sites, and in other areas that maybe identified by the local governments units as suitable for socialized housing. Section 5, Exemption. - The following land shall be exemption from the coverage of this Act: a) Those include in the coverage of Republic Act No.6657, otherwise known as the comprehensive Agrarian Reform law: b) Those actually used for national defense and security of the Stare; c) Those used, reserved or otherwise set aside for government offices and installations, whether owned by the National Government, its agencies and instrumentalities, including government owned or controlled corporations, or by the local government unit : Provide that the lands herein mentioned , or portions thereof , which have not been used for the purpose for which they have been reserved or set aside for the past ten (10) years from the affectivity of this Act, shall be covered by this Act; d) Those used or set aside for parks, reserved for flora fauna, forest and watersheds, and other areas necessary to maintain ecological balance or environment protection, as determined and certified to by the proper government agency :and e) Those actually and primary used for religious, charitable, o educational purposes, cultural historical sites, hospital and health center, and cemeteries or memorial parks. The exemption herein provided shall not apply when the use or purposed of the abovementioned lands has ceased to exist. ARTICLE III NATIONAL URBAN DEVELOPMENT AND HOUSING FRAMEWORK Section 6. Frameworks for Rational Development.- There shall be National Urban Development an Housing Frame work to be formulated by the Housing and Land Used Regulatory Board under the direction of the Housing Urban Development Coordinating Council in coordination with all local government units and other concerned public sector within one (1) year from affectivity of this Act. The Framework shall refer to the comprehensive plan for urban and urbanizable areas aimed at achieving the objectives of the Program. In the formulation of the framework, a review and rationalization of existing town and land use plans, housing programs, and all other projects and activities of government agencies and the private sector which may substantially affect urban land use patterns, transportation and public utilities, infrastructure, environment and population movements shall be undertaken with the concurrence of the local government units concerned. ARTICLE IV LAND USE, INVENTORY, ACQUISITION AND DISPOSITION 102

Section 7. Inventory of Lands. Within one (1) year from the effectivity of this Act, all city and municipal governments shall conduct an inventory of all lands and improvements thereon within their respective localities. The inventory shall include the following: a. Residential lands; b. Government-owned lands, whether owned by the National Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries; c. Unregistered or abandoned and idle lands; and d. Other lands. In conducting the inventory, the local government units concerned, in coordination with the Housing and Land Use Regulatory Board and with the assistance of the appropriate government agencies, shall indicate the type of land use and the degree of land utilization, and other data or information necessary to carry out the purposes of this Act. For planning purposes, the Housing and Urban Development Coordinating Council shall be furnished by each local government unit a copy of its inventory which shall be updated every three (3) years. Section 8. Identification of Sites for Socialized Housing. – After the inventory, the local government units, in coordination with the National Housing Authority, the Housing and Land Use Regulatory Board, the National Mapping Resource Information Authority, and the Land Management Bureau, shall identify lands for socialized housing and resettlement areas for the immediate and future needs of the underprivileged and homeless in the urban areas, taking into consideration the degree of availability of basic services and facilities, their accessibility and proximity to job sites and other economic opportunities, and the actual number of registered beneficiaries. Government-owned lands under paragraph (b) of the preceding section which have not been used for the purpose for which they have been reserved or set aside for the past ten (10) years from the effectivity of this Act and identified as suitable for socialized housing, shall immediately be transferred to the National Housing Authority subject to the approval of the President of the Philippines or by the local government unit concerned, as the case may be, for proper disposition in accordance with this Act. Section 9. Priorities in the Acquisition of Land. – Lands for socialized housing shall be acquired in the following order: a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries; b) Alienable lands of the public domain; c) Unregistered or abandoned and idle lands; d) Those within the declared Areas for Priority Development, Zonal Improvement Program sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired; e) Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been acquired; and f) Privately-owned lands. Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned in this section shall not apply. The local government units shall give budgetary priority to on-site development of government lands. Section 10. Modes of Land Acquisition. – The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation: Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted. Provided, further, that where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act: Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court. For the purpose of socialized housing, government-owned and foreclosed properties shall be acquired by the local government units, or by the National Housing Authority primarily through negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land shall be given the right of first refusal. Section 11. Expropriation of Idle Lands. All idle lands in urban and urbanizable areas, as defined and identified in accordance with this Act, shall be expropriated and shall form part of the public domain. These lands shall be disposed of or utilized by the Government for such purposes that conform with their land use plans. Expropriation proceedings shall be instituted if, after the lapse of one (1) year following receipt of notice of acquisition, the owner fails to introduce improvements as defined in Section 3 (f) hereof, except in the case of force majeure and other fortuitous events. Exempted from this ownership of which is subject of a pending litigation. Section 12. Disposition of Lands for Socialized housing- The National Housing Authority , with respect to lands belonging to the national Government , and the local government units with respect to other lands within their respective localities, shall coordinate with each other to formulate and make available various alternative schemes for thereof the disposition of lands to the beneficiaries of the Program. These schemes shall not be limited to those involving transfer of ownership in fee simple but shall include lease, with option to purchase, usufruct or such other variations as the local government units or the National Housing Authority may deem most 103

expedient in carrying out the purposes of this Act. Consistent with this provision, a scheme for public rental housing may be adopted. Section 13. Valuation of Lands for Socialized Housing.- Equitable land valuation guidelines for socialized housing shall be set by the Department of Finance on the Basis of the market value reflected in the zonal valuation, or in its absence, on the latest real property tax declaration. For sites already occupied by qualified program beneficiaries, the Department of Finance shall factor into the valuation the blighted status of the land as certified by the local government unit or the National Housing Authority. Section 14. Limitations on the Disposition of Lands for Socialized Housing.- No land for socialized housing, including improvements or rights thereon, shall be sold, alienated, conveyed, encumbered or leased by any beneficiary of this program except to qualified program beneficiaries as determined by the government agency concerned. Should the beneficiary unlawfully sell, transfer, or otherwise dispose of his lot or any right thereon, the transaction shall be null and void. He shall also lose his right to the land, forfeit the total amortization paid thereon, and shall be barred from the benefits under this Act for a period of ten (10) years from the date of violation. In the event the beneficiary dies before full ownership of the land is vested on him, transfer to his heirs shall take place only upon their assumption of his outstanding obligations. In case of failure by the heirs to assume such obligations, the land shall revert to the Government for disposition in accordance with this Act. ARTICLE V SOCIALIZED HOUSING Section 15. Policy.- Socialized housing, as defined in Section 3 hereof, shall be the primary strategy in providing shelter for the underprivileged and homeless. However, if the centurial arrangement in a particular socialized housing program is in the nature of leasehold or usufruct, the same shall be transitory and the beneficiaries must be encouraged to become independent from the Program within a given period of time, to be determined by the implementing agency concerned. Section 16. Eligibility Criteria for Socialized Housing Program Beneficiaries.- To qualify for the socialized housing program, a beneficiary: a) Must be a Filipino citizen; b) Must be an underprivileged and homeless citizen, as defined in Section 3 of this Act; c) Must not own any real property whether in the urban or rural areas ; and d) Must not be a professional squatter or a member of squatting syndicates. Section 17. Registration of Socialized housing Beneficiaries.- The Housing and Urban development Coordinating Council , in coordination with the local governments units, shall design a system for the registration of qualified Program beneficiaries in accordance with the Framework. The local governments units, within (1) year from the effectivity of his Act, shall identify and register all beneficiaries within their respective localities. Section 18. Balanced Housing Development. - The Program shall include a system to be specified in the Framework plan whereby developers of propose subdivision projects shall be required to develop an area for socialized housing equivalent to at least twenty percent (20%) of the total subdivision area or total subdivision project cost, at the option of the developer, within the same city or municipality, whenever feasible, and in accordance with the standards set by the Housing and Land Use Regulatory Board and other existing laws. The balanced housing development as required may also be complied with by the developers concerned in any of the following manner: a). Development of new settlement; b). Slum upgrading or renewal of areas for priority development either through zonal improvement programs or slum improvement; c). Joint-venture projects with either the local governments units or any the housing agencies; or d). Participation in the community mortgage program. Section 19. Incentives for the National Housing Authority. -The national housing Authority, being the primary government agency in charge of providing housing for the underprivileged and homeless, shall be exempted from the payment of all fees and charges of any kind, whether local or national, such as income and real taxes. All documents or contacts executed by and of the National Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees, including fees required for the issuance of transfer of titles. Section 20. Incentives for Private Sector Participating in Socialized housing. - To encourage greater private sector participation in socialized housing and further reduced the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: a) Reduction and simplification of qualification and accreditation requirements for participating private developers 104

b) Creation of one – stop offices in the different regions of the country for the processing, approval and issuance of clearances, permits and licenses: Provided , That clearances, permits and licenses shall be issued within ninety ( 90) days from the date of submission of all requirements by the participating private developers; c) Simplification of financing procedures; and d) Exemption from the payment of the following: Project – related income taxes; Capital gains tax on raw use for the project; Value-added tax for the project concerned; Transfer tax for both raw and completed projects; and Donor’s tax for both lands certified by the local government units to have been donated for socialized housing purposes. Provided, that upon application for exemption, a lien on that title of the land shall be annotated y the Register of deeds: provider, further, that the socialized housing development plan has already been approved by the appropriate government agencies concerned: Provided, finally, That all the savings acquired by virtue of this provision shall secure in favor of the beneficiaries subject to the implementing guidelines to be issued by the Housing and Development Coordinating Council. Appropriate implementing guidelines shall e prepared by the Department of Finance, in consultation with the Housing and Urban Development Coordinating Council, for the proper implementation of the tax exemption mentioned in this section within one (1) year after the approval of this Act. Property owners who voluntarily provide resettlement sites to illegal occupants of their lands shall be entitled to a tax credit equivalent to the actual non-recoverable expenses incurred in the resettlement, subject to the implementing guidelines jointly issued by the Housing and Urban Development Coordinating Council and the Department of Finance. Section 21. Basic Services. - Socialized housing or resettlement areas shall be provided by the local government unit or the National Housing Authority in cooperation with the developers and concerned agencies with the basic services and facilities: a) Potable water; b) Power and electricity and an adequate power distribution system; c) Sewerage Facilities and an efficient and adequate solid waste disposal system; and d) Access to primary roads and transportation facilities. 1) 2) 3) 4) 5)

The provision of other basic services and facilities such as health, education, communication, security, recreation, relief and welfare shall be planned and be given priority for implementation by the local government unit and concerned agencies in cooperation with the sector and the beneficiaries themselves. The local Government unit, in coordination with the concerned national agencies, shall ensure that these basic services are provided at the most cost-efficient rates, and set a mechanism to coordinate operationally the thrusts, objectives and other government agencies concerned with providing basic services to housing projects. Section 22. Livelihood Component. - To the extent feasible, socialized housing and resettlement projects shall be located near areas where employed opportunities are accessible. The government agencies dealing with the development of livelihood programs and of livelihood loans shall give priority to the beneficiaries of the Program.

Section 23. Participation of Beneficiaries.- The local governments units, in coordination with the Presidential Commission for the Urban poor and concerned government agencies, shall afford program beneficiaries or their duly designated representatives an opportunity to be heard and to participate in the decision-making process over matters involving the protection and protection and promotion of of there legitimate collective interests which shall include appropriate documentation and feedback mechanisms. They shall also be encouraged to organized themselves and undertake self-help cooperative housing and other livelihood activities. They shall assist the Government in preventing the incursions of professional squatters and members of squatting syndicates into their communities. In instances when the affected beneficiaries have failed to organized themselves or form an alliance within a reasonable period prior to the implementation of the program or projects affecting them , consultation between the implementing agency and the affective beneficiaries shall be conducted with the assistance of the Presidential Commission for the Urban Poor and the concerned non-government organization. Section 24. Consultation with Private Sector.- Opportunities for adequate consultation shall be accorded to the private sector involved in socialized housing project pursuant to this Ac ARTICLE VI AREAS FOR PRIORITY DEVELOPMENT, ZONAL IMPROVEMENT PROGRAM, SITES AND SLUM IMPROVEMENT AND RESETTLEMENT PROGRAM SITES Section 25. Benefits. - In addition to the benefits provided under existing laws and other related insurances to occupants of areas for priority development, zonal improvement program site, such occupants shall be entitled to 105

priority in all government projects initiated pursuant to this Act. They shall also be entitled to the following support services: a) Land surveys and titling at minimal cost; b) Liberalized terms on credit facilities and housing loans and one hundred percent (100%) deduction from every homebuyer’s gross income tax of all interest payments made on documented loans incurred for the construction or purchase of the homebuyer’s house. c) Exemption from the payment of documentary stamp tax, registration fees, and for the issuance of transfer certificate of titles; d) Basic services as provided for in Section 21 of this Act. And e) Such other benefits that may arise from the implementation of this Act.

ARTICLE VII URBAN RENEWAL AND RESETTLEMENT Section 26. Urban Renewal and Resettlement. - This shall include the rehabilitation and development of blighted and slum areas and the resettlement of Program beneficiaries in accordance with the provisions of this Act. On- Site development shall be implemented whenever possible in order to ensure minimum movement of occupants of blighted lands and slum areas. The resettlement of the beneficiaries of the program from their existing places of occupancy shall be undertaken only when on-site development is not feasible and after compliance with the procedures laid down in Section 28 of this Act. Section 27. Action Against Professional Squatters and squatting Syndicates. - The Local government units, in cooperation with the Philippine national Police, the Presidential Commission for the urban Poor (PCUP), and the PCUP-accredited urban poor organization in the area, shall adopt measures to identify and effectively curtail the nefarious and illegal activities of professional squatters and squatting syndicates, as herein defined. Any person or group identified as such shall be summarily evicted and their dwellings or structures demolished, and shall be disqualified to avail of the benefits of the program. A public official who tolerates or abets the commission of the abovementioned acts shall be dealt with in accordance with existing laws. For purposes of this Act, professional squatters or members of squatting syndicates shall be imposed the penalty of six (6) years imprisonment or a fine of not less than Sixty thousand pesos (P60,000) but not more than One hundred thousand pesos (P100,000), or both, at the discretion of the court. Section 28. Eviction and Demolition. - Eviction or Demolition as a practice shall be discouraged. Eviction or demolition, however, may be allowed under the following situations: (a) When persons or entities occupy danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks, roads, parks, and playgrounds; (b) When government infrastructure projects with available funding are about to be implemented; or (c) When there is a court order for eviction and demolition. In the execution of eviction or demolition orders involving underprivileged and homeless citizens, the following shall be mandatory: 1) Notice upon the effected persons or entities at least thirty (30) days prior to the date of eviction or demolition; 2) Adequate consultations on the matter of resettlement with the duly designated representatives of the families to be resettled and the affected communities in the areas where they are to be relocated; 3) Presence of local government officials or their representatives during eviction or demolition; 4) Proper identification of all persons part in the demolition; 5) Execution of eviction or demolition only during regular office hours from Mondays to Fridays and good weather, unless the affected families consent otherwise; 6) No use of heavy equipment for demolition except for structures that are presents and of concrete materials; 7) Proper uniforms for members of the Philippines National Police who shall occupy the first line of law enforcement and observe proper disturbance control procedures: and 8) Adequate relocation, whether temporary or permanent: Provided, however, That in cases of eviction and demolition pursuant to a court order involving underprivileged and homeless citizens, relocation shall be undertaken by the local government unit concerned and the National Housing Authority with the assistance of other government agencies within forty-five (45) days from service of notice of final judgment by the court, after which period the said shall be executed: Provided, further, that should relocation not be possible within the said period, financial assistance in the amount equivalent to the prevailing minimum daily wage multiplied by sixty (60) days shall be extended to the affected families by the government unit concerned. The Department of the Interior and Local government and Housing an Urban Development Coordinating Council shall jointly promulgate the necessary rules and regulations to carry out te above provision. 106

Section 29. Resettlement. - Within two (2) years from the effectivity of this Act, the local government units, in coordination with the National Housing Authority, shall implement the relocation and resettlement of persons living in danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and in other public places such as sidewalks, roads, parks and playgrounds. The local government unit, in coordination with the Housing authority, shall provide relocation or resettlement sites with basic services and facilities and access to employment and livelihood opportunities sufficient to meet the basic needs of the affected families. Section 30. Prohibition Against New Illegal Structures. - It shall be unlawful for any person to construct any structure in areas mentioned in the preceding section. After the effectivity of this Act, the barangay, municipal or city government units shall prevent the construction of any kind or illegal dwelling units or structures within their respective localities. The head of any government unit concerned who allows, abets or otherwise tolerates the construction of any structure in violation of this section shall be liable to administrative sanctions under existing laws and to penal sanctions provided for in this Act. ARTICLE VIII COMMUNITY MORTGAGE PROGRAM Section 31. Definition. - The Community Mortgage (CMP) is a mortgage financing program of the National Home Mortgage Finance Corporation which legally organized associations of underprivileged and homeless citizens to purchase and develop a tract of land under the concept of community ownership. The primary objective of the program is assists resident of blighted or depressed areas to own the lots they occupy, where they choose to relocate to, eventually improve their neighborhood and homes to the extent of their affordability. Section 32. Incentives. - To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: a) Government-owned or controlled corporations and local government units , may dispose of their idle lands suitable for socialized housing under CMP through negotiated salt at prices based on acquisition cost plus financial carrying cost; b) Properties sold under the CMP shall be exempted from the capital gains tax; and c) Beneficiaries under the CMP shall not be evicted nor dispossessed of their lands or improvements unless they have incurred arrearages in payments of amortizations for three (3) months Section 33. Organization of Beneficiaries. - Beneficiaries of the Program shall be responsible for their organization into associations to manage their subdivisions or places of residents, to secure housing loans under existing Community Mortgage Program and projects beneficial to them. Subject to such rules and regulations to be promulgated by the National Home Mortgage Finance Corporation, associations organized to this act may collectively acquire and own lands covered by this program. Where the beneficiaries fail to form an association by and among themselves, the National home mortgage Finance corporation shall initiate the organization of the same in coordination with the Presidential Commission for the Urban poor and the local government units concerned. No person who is not a bona fide resident of the area be a member or officer of such association. ARTICLE 1X RELATED STRATEGIES Section 34. Promotion of Indigenous Materials and Technologies. - The local government units, in cooperation with the national housing Authority, Technology and Livelihood Resource Center, and other concerned agencies, shall promote the production and use of indigenous, alternatives, and low-cost construction materials and technologies for socialized housing. Section 35. Transport System. - The local government units, in coordination with the departments of transportation and Communications, Budget and management, Trade and Industry, Finance, and Public Works and Highways, the home Insurance Guaranty Corporation, and other concerned government agencies, shall device a set of mechanisms include incentives to the private sector so that a viable transport system shall evolve and develop in the urban areas. It shall also formulate standards designed to attain these objectives: (a) Smooth flow traffic; (b) Safe and convenient of travel; (c) Minimum use of land space; (d) Minimum damage to the physical environment; and (e) Adequate and efficient transport service to the people and goods at cost Section 36. Ecological Balance. - The local government units shall coordinate with the Department of Environment and Natural Resources in taking measures that will plan and regulate urban activities for the conservation and protection of vital, unique and sensitive positive ecosystems, scenic landscapes, cultural sites and other similar resource areas. To make the implementation of this function more effective participation of the citizenry in environmental rehabilitation and decision-making process shall be promoted and encouraged. The local government units shall recommend to the environment and Management Bureau the Immediate closure of factories, mines and transport companies which are found to be causing massive pollution. 107

Section 37. Population Movements. - The local governments units shall set up an effective mechanism, together with the appropriate agencies like the population commission, the National Economic and development Authority and the National Statistics office, to monitor trends in the movements of population from rural to urban, and urban to rural areas. They shall identify measures by which such movements can be influenced to achieve balance between urban capabilities and population, to direct appropriate segments of the population into areas they can have access to opportunities to improve their lives and to contribute to national growth and recommend proposed legislation to congress , if necessary. The population Commission, the national Economic and development authority, and the National Statistics Office shall provide advanced planning information to national and local government planners on population projections and the consequent level of services needed in particular urban and urbanizable areas. This service will include early-warning systems on expected dysfunctions in a particular urban area due to population increases, or age structure changes. Section 38. Urban-rural Interdependence. - To minimize rural to urban migration and pursue urban Decentralization, the local government units shall coordinate with the National Economic and Development programs that will stimulate economic growth and promote socioeconomic development in the countryside. ARTICLE X PROGRAM IMPLEMENTATION Section 39. Role of Local Government Units. - The local government units shall be charged with the implementation of this Act in their respective localities, in coordination with the Housing and Urban development Coordinating Council, the housing agencies, the Presidential Commission for Urban poor, the sector and other non- government organizations. They shall prepare a comprehensive land use plan for their respective localities in accordance with the provisions of this Act. Section 40. Role of Government Housing Agencies. - In addition to their respective existing powers and functions, and those provided for in this Act, the hereunder mentioned housing agencies shall perform the following: (a) The housing and Urban Development coordinating council shall, through the key housing agencies, provide local government units with necessary support such as: (1) Formulation of standards and guidelines as well as providing technical support in the preparation of town and land use plans; (2) In coordination with the National Economic and development Authority and the National statistics Office, provide data and information for forward-planning by the local government units in their areas, particularly on projections as to the population and development trends in their localities and the corresponding investments programs to provide appropriate types and levels of infrastructure, utilities, services and land use patterns; and (3) Assistance in obtaining funds and other resources needed in the urban development and housing programs in their areas or responsibility. (b) The National Housing Authority, upon request of local government units , shall provide technical and other forms of assistance in the implementation of their respective urban development and (c) housing programs with the objective of augmenting and enhancing local government capabilities in the provision of housing benefits to their constituents; (d) The National home Mortgage Finance Corporation shall administer the Community Mortgage Program under this Act and promulgate rules and regulations necessary to carry out the provisions of this Act; and (e) The Home Insurance Guarantee Corporation shall design an appropriate guarantee scheme to encourage financial institutions to go into direct lending for housing. Section 41. Annual Report. - The Housing and Urban Development Coordinating Council and the local government units shall submit a detailed annual report with respect to the implementation of this Act to the President and the Congress of the Republic of the Philippines. ARTICLE XI FUNDING Section 42. Funding. - Funds for the urban development and housing program shall come from the following sources: (a) A minimum of fifty percent (50%) from the annual net income of the Public Estate authority, to be used by the National Housing Authority to carry out its programs of land acquisition for resettlement purposes under this Act; (b) Proceeds from the disposition of ill-gotten wealth, not otherwise previously set aside for any other purpose, shall be applied to the implementation of this Act and shall be administered by the National Home Mortgage Finance Corporation; (c) Loans, grants, bequest and donations, whether from local or foreign sources; (d) Flotation of bonds, subject to the guidelines to be set by the Monetary Board; 108

(e) Proceeds from the social housing tax and, subject to the concurrence Code of 1991 and other existing laws; (f) Proceeds from the sale of disposition of alienable public lands in urban areas; and (g) Domestic and foreign investment or financing through appropriate arrangements like the build operate – and-transfer scheme. Section 43. Socialized Housing Tax. – Consistent with the constitutional principle that the ownership and enjoyment of property ear a social function and to raise funds from the Program, all local government units are hereby authorized to impose an additional one-half percent (0.5%) tax on the assessed value of all lands in urban areas in excess of Fifty thousand pesos (P50,000). ARTICLE XII TRANSITORY PROVISION Section 44. Moratorium on Eviction and Demolition. - There shall be a moratorium on the eviction of all program beneficiaries and on the demolition of their houses or dwelling units for a period of three (3) years from the effectivity of this Act: Provided, That the moratorium shall not apply to those persons who have constructed their structures after the effectivity of this Act and for cases enumerated in Section 28 hereof. ARTICLE XII COMON PROVISIONS Section 45. Penalty Causes. - Any person who violates any provision of this Act shall e imposed the penalty of not more than six (6) years of imprisonment or a fine of not less than Five thousand pesos (P5,000) but not more than One hundred thousand pesos (P100,000), or both, at the discretion of the court: Provided, That, if the offender is corporation, partnership, association or other juridical entity, the penalty shall be imposed on the officer or officers of said corporation, partnership, association or juridical entity who caused the violation. Section 46. Appropriations. - The amount necessary to carry out the purposes of this Act shall be included in the annual budget of implementing agencies in the General Appropriations Act of the year following its enactment into law and every year thereafter. Section 47. Separability Causes. - If for any reason, any provision of this Act is declared invalid or unconstitutional, the remaining provisions not affected thereby shall continue to be in full force and effct. Section 48. Repealing Clause. - All laws, decrees, executive orders, proclamations, rules and regulations, and issuance, or parts thereof which are inconsistent with the provisions of this Act, are hereby repealed or modified accordingly. Section 49. Effictivity Clauses. - This Act shall take upon its publication in least two (2) national newspapers of general circulation. Approved, (Sgd.) NEPTALI A. GONZALES (Sgd.) RAMON V. MITRA President of the Senate Speakers of the House of Representatives This Act which is a consolidation of House Bill No. 34310 and Senate Bill No. 234 was finally passed by the House of Representative and the Senate on February 3, 1992 (Sgd.) ANACLETO D. BADOT, JR. (Sgd.) CAMILO L. SABIO Secretary of the Senate Secretary General Approved March 24, 1992 (Sgd.) CORAZON C AQUINO

109

Planning, Development and Zoning LAND USE PLANNING Laws that Ensure Rational Land Use and Sustainable Urban and Regional Development  Executive Order No. 72 - Providing for the Preparation and Implementation of the Comprehensive Land Use Plans of Local Government Units Pursuant to the Local Government Code of 1991 and Other Pertinent Laws  Memorandum Circular No. 54 - Prescribing the Guidelines of Sec. 20, R. A. 7160, Authorizing Cities/Municipalities to Reclassify Lands into Non-Agricultural Uses  Executive Order No. 124 - Establishing Priorities and Procedures in Evaluating Areas for Land Conversion in Regional Agricultural/Industrial Centers, Tourism Development Areas Sites for Socialized Housing Planning is the key to orderly and rational land development in any local government unit, i.e. a city or municipality. A Comprehensive Land Use Plan (CLUP) prescribes the developmental pace, directions and strategies for the optimum use of land resources in a community as well as its role in provincial, regional and national development. The CLUP is enacted into a zoning ordinance for purposes of enforcement.

Development Role HLURB has the twin roles of enhancing and reinforcing rational housing and real estate service delivery via a triad of strategies namely; policy, planning and regulation. Such rules are enunciated and defined in Presidential Decrees (PD), Letters of Instruction (LOI), Republic Acts (RA), Executive Orders (EO), office of the President Memorandum Circulars (OP-MC) and Batas Pambansa (BP). The HLURB pursues activities to attain rational land use as specified in a number of directives.  Review and ratify land use plans of Metro Manila cities and municipalities, provinces, highly urbanized cities and independent component cities (EO No. 72);  Enforce zoning regulations (EO No. 648);

 Investigate and adjudicate complaints (EO No. 648);  Assist  

local government units assume devolved functions via training and consultation; Coordinate land reclassification clearance system (MC No. 54); Update and revise rules, guidelines and standards on land use (EO No. 648); and

110



Update and revise National Urban Development and Housing Framework (RA No. 7279).

CONDOMINIUM CONCEPTS

BACKGROUND Condominium housing was basically born out of the condition of limited land space. In the Philippines, the concept of condominiums was formally recognized with the passage by Congress on June 16, 1966 of Republic Act No. 4726 entitle "An Act to Define Condominium, Establishment Requirements for its Creation, and Govern its Incidence." Although one normally thinks of condominium in the from of a building, a condominium may take the form of subdivision, or what may be referred to as the "horizontal condominium" or also referred to as a "townhouse project" vs. the traditional vertical condominium or condominium building. MAJOR LAWS GOVERNING CONDOMINIUM

The Condominium Act RA 4796 (As Amended)

The Subdivision and Condominium Buyer Protective Decree PD 957

A. ADVANTAGES OF CONDOMINIUMS Affordability is Enhanced

Maximizing Land Space

It enhance affordability by fractionalizing the cost of land and building.

There is economy in land space. Families or parties holding title to contiguous land may obtain adequate housing by consolidating their land and constructing a condominium

thereon. Facilities and Services to build

This is because, unless otherwise provided in the become cheaper Master Deed, their cost are distributed equally among maintain and the unit owners.

Exclusive ownership of unit

-

-

It involves retention or the psychological and economic

Co-ownership of undivided Concepts of a family house through exclusive ownership of common areas and a unit while holding co-ownership rights in the undivided facilities common areas and facilities. Closer neighborhood or community ties

-

Due to the physical closeness of each unit and the concepts of co-ownership of common areas and facilities, unit owners are bound to uphold the quality of their living standards.

B. DEFINITION OF TERMS CONDOMINIUM

This is an interest in real estate consisting of absolute ownership in a unit of residential, commercial or industrial buildings and common ownership of the land and common areas of the condominium project.

CONDOMINIUM PROJECT

It is the TOTALITY of the site (land), condominium units and common areas.

111

CONDOMINIUM UNIT

This is the SPACE encompassed by the interior surface of the floor, ceiling, walls, and exterior doors and windows, which is susceptible of IBDEPENDENT USE and OWNERSHIP.

COMMON AREAS

Refer to the weight bearing walls, columns and beams, stairways, halls, elevators, etc including the electrical, water and plumbing systems and amenities in a condominium project. There are two kinds of common areas, namely: (1) General (or undivided) common areas and (2) Limited (or divided) common areas.

C. TYPES OF COMMON AREAS GENERAL OR UNDIVIDED -

These refer to the parts of the condominium project COMMON AREAS which are not subject to the exclusive use of any one group of group of owners. Examples are: swimming, pool, hallways, stairways, elevators, etc.

LIMITED OR DIVIDED

Common areas which are allocated to the exclusive COMMON AREAS use of one or group of unit owners.

D. EXTENT OF INTEREST IN COMMON AREAS 1. In the absence of any provision in the Master Deed, all unit owners shall have EQUAL SHARE in the common areas. 2. The Master Deed may provide any of the following alternatives: 2.1

Equal Sharing

2.2

Sharing Based on VALUE

2.3

Sharing Based on UNIT AREAS in relation to Total Area

E. IMPORTANT DOCUMENTS IN CONDOMINIUM SALES 1. MASTER DEED

This is the ENABLING ACT of any condominium project. This "enables" the condominium to exist and governs its existence.

2. DEED OF RESTRICTIONS

The Deed of Restrictions lays down the provisions for insurance coverage's, the management body, maintenance cost and assessment basis and audit.

3. ARTICLES OF INCORPORATION This establishes the birth guidelines of LAWS condominium corporation.

AND

4. RULES AND REGULATIONS

Determines what unit owners and tenants can and cannot do.

5. CONDOMINIUM CERTIFICATE OF TITLE (CCT)

This is the evidence or proof of one's ownership of the condominium unit (compared to the transfer certificate of title for land ownership)

6. TAX DECLARATION(S)

This document will determine to what extent the unit owners are liable with regards to the tax obligation on the condominium project's land and common areas and the individual units.

7. CERTIFICATE OF MANAGEMENT

Document issued by the condominium corporation that the conveyance is in accordance with the Master Deed/Restrictions.

F. THE MASTER DEED 112

BY-

A condominium project's Master Deed includes the following: 1. Description of LAND(S) include in the condominium project. 2. Description of the BUILDING(S) like the number of storys, basement, number of units and their attendant accessories. 3. Description of COMMON AREAS and FACILITIES which are part and parcel of the project. 4. Description of the INTEREST acquired by the unit owners in the common areas and land(s) 5. PURPOSE(S) for which the building and units are to be used. 6. CERTIFICATION BY REGISTERED OWNER OF THE P[ROPERTY if he is other than those executing the Master Deed, that he consents to the registration of the Deed. 7. DEED OF REGISTRATIONS 8. ANNEXES, land survey plan and building diagrammatic floor plans. G. THE Deed of Restrictions Deeds of Restriction indicate: 1. Management Body 2. Provision for Insurance Coverage 3. Provision for the Maintenance of Common Areas and Facilities 4. Sharing of Realty Tax on Common Areas 5. Manner of Amending Restrictions 6. Independent Audit 7. Assessments and Dues 8. Project and Dissolution of the Condominium Corporation H. RIGHTS AND OBLIGATIONS OF UNIT OWNERS RIGHTS

OBLIGATIONS

1. Absolute ownership of unit.

1. Pay the realty tax on his unit

2. Co-ownership of land and common areas

2. Share in realty tax on common and land

3. Exclusive easement of the air encompassed by his unit

3. Pay insurance of his unit

4. Non-exclusive easement to common areas

4. Share the insurance of common areas

5. Repair, paint, redecorate the interior surface of his unit

5. Comply with use restrictions 6. Pay condominium dues/assessments

6. Sell, lease or mortgage his unit 7.Vote in meetings of condominium corporation.

7. Give "right of first refusal" if so required by Master Deed

I. The NEED for a Condominium Corporation

1. NECESSITY FOR CREATION - The organization of a condominium corporation is OPTIONAL IF NO UNIT WILL BE SOLD TO FOREIGNERS. The corporation is to the land shall be transferred to the corporation to comply with the constitutional mandate that corporations may acquire real estate provided that at least 60% of the capital or membership is Filipino. 2. PURPOSE OF CORPORATION - (a) To hold title to the and (b) Act as the management body. 3. CONFLICTS WITH MASTER DEED - In case of conflict between the provisions of the Articles of Incorporation of the condominium corporation and the Master Deed, the latter shall prevail based the following reasons: 3.1 It is Master Deed which gives birth to the condominium project. 3.2 The condominium provides that the Article of Incorporation of the condominium corporation shall not conflict with the Master Deed.

113

4. TERM OF CORPORATION - The life of the condominium corporation shall be coterminous with the existence of the condominium project. 5. EFFECTS OF VOLUNTARY DISSOLUTION (a) The corporation shall be deemed to hold a power of attorney from all stockholders or members to sell their separate interest the project. (b) Liquidation of the corporation shall be affected by the sale of the entire project subject to the rights of the Corporation and individual condominium creditors. 6. EFFECTS OF INVOLUNTARY DISSOLUTION (a) The common areas held by the corporation shall be transferred pro-indiviso and in proportion to their interest to the members or stockholders. (b) The transfer shall be deemed full liquidation of the interest of the members or stockholders in the corporation. J. CONDOMINIUM vs. TRADITIONAL OWNERSHIP Major differences between CONDOMINIUM vs. TRADITIONAL OWNERSHIP RESTRICTIONS ON CAPACITY TO BUY PROPERTY RIGHTS EVIDENCE OF OWNERSHIP

CONDOMINIUM Condominium Certificate of Titles (C.C.T) Absolute ownership of unit and Co-ownership of land and common areas Alien ownership should not go beyond 40% of the units in a condominium corporation

TRADITIONAL Transfer Certificate of Title (OCT/T.C.T) Absolute ownership of land and all improvements Aliens

are

prohibited

unless

acquired

through

114

hereditary

succession

or

special

laws

THE CONDOMINIUM ACT (REPUBLIC ACT NO. 4726) As amended by republic Act No. 7899, AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS INCIDENTS SECTION 1. The short of this Act shall be "The Condominium Act" SECTION 2. A condominium is an interest in real property consisting of a separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the "Condominium Corporation") in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas. The interest in condominium may be ownership or any other interest in real recognized by the law of property in the Civil Code and other pertinent laws. SECTION 3. As used in this Act, unless the context otherwise requires: a) "Condominium" b) "Unit"

means a condominium as defined in the next preceding section. means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors 9or part or parts of floors) in a building or buildings and such accessories as maybe appended thereto. c) "Project" means the entire parcel of real property divided or to be divided in condominiums, including all structures thereon. d) "Common Areas" means the entire project excepting all units separated or held or reserved. e) "To divide real property" means to divide the ownership thereof or other interest therein by conveying one or more condominiums therein but less than the whole thereof. SECTION 4. The provisions of this Act shall apply to property divided or to be divided into condominiums only if there shall be recorded in the Register of Deeds of the province or city in which the property lies, and duly annotated in the corresponding certificate of title of the land, if the latter had been patented or registered under either Land Registration or Cadastral Acts, an enabling or Master Deed which shall contain, among others, the following: a) Description of the land on which the building or buildings and improvements are to be located; b) Description of the or building, stating the number of stories and basements, the number of units and their accessories, if any: c) Description of the common areas and facilities: d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project. Where title to or the appurtenant interests in the common areas is to held by a condominium corporation, a statement to this effect shall be include; e) Statement of the purposes for which the building or buildings and each of the units are intended or restricted as to use; f) A certificate of the registered owner of the property, if he is other than those executing the Master Deed, as well as of all registered holders of any lien or encumbrance on the property, that they consent to the registration of the deed; g) The following plans shall be appended to the deed as integral thereof: 1. A survey plan of the included in the project, unless a survey plan of the same property had previously been filed in said office; 2. A diagrammatic floor plan of the building or buildings each unit, its relative location and approximate dimensions. h) Any reasonable restrictions not contrary to law, morals or public policy regarding the right of any condominium owner to alienate or dispose of his condominium.

115

The enabling or master deed may be amended or revoke upon registration of an instrument executed by a simple majority of the registered owners of the property: Provided, That in a condominium project exclusively for either residential or commercial use, simple majority shall be on a per unit of ownership basis and that in the case of mixed use, simple majority shall be on a floor area of ownership basis: Provided, further, That prior notifications to all registered owners are done: and Provided, finally That any amendment or revocation already decided by a simple majority of all registered owners shall be submitted to the Housing and Land Use Regulatory Board and the city/municipal engineer for approval before it can be registered. Unit registration of a revocation, the provisions of this Act shall continue to apply to such property. (As amended by R.A. No. 7899, approved Feb. 23, 1995) SECTION 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interest in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation; Provided, however, That where the common areas in the condominium project are held by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens or corporation at least 60% of the capital stock of which belongs to Filipino citizens, except in case of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws. SECTION 6. Unless otherwise expressly provided in the enabling or mater deed or the declaration of restrictions, the incidents of a condominium grant are as follows: a) The boundary of the granted are the interior surface of the perimeter walls, floors, ceilings, windows and door thereof. The following are not part of the unit: bearing walls columns, floors roofs, foundations and other common structural elements of the building; lobbies, stairways, hallways, and other areas of common use; elevator equipment and shafts, central heating, central refrigeration and central airconditioning equipment, reservoirs, tanks, pumps, and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located within the unit; b) There shall pass with the unit, as an appurtenance thereof, an exclusive easement for the use of the air space encompassed by the boundaries of the unit as it exist at any particular time and as the unit may lawfully be altered or reconstructed from time to time. Such easement shall be automatically terminated in any air space upon destruction of the unit as to render it untenantable. c) Unless otherwise provided, the common areas are held in common by the holders of units, in equal share one for each unit; d) A non-exclusive easement for ingress, egress, and support through the common areas in appurtenant to each unit and the common areas are subject to such easement; e) Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surface of the walls, ceilings, floors, windows and doors bounding his own unit; f) Each condominium owner shall have the exclusive right ti mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominium owner is personal to him; g) Each condominium owner has also the absolute right to sell or dispose of his condominium unless the master deed contains a requirement that the property be first offered to the condominium owners within a reasonable period of time before the same is offered to outside parties. SECTION 7. Except as provided in the following section, the common areas shall remain undivided, and there shall be no judicial partition thereof. SECTION 8. Where several person own condominium project, an action may be brought by one or more such for partition thereof by sale of the entire project, as if the owners of the condominium in such project were co-owners of the entire project in the same proportion as their interests in the common areas; Provided, however, That a partition shall be made only upon a showing: a) That three years after damage or destruction to the project which renders a material part thereof, unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than 30 percent interest in the common areas are opposed to repair or restoration of the project; or c) That the project has been in existence in excess of 50 years, that it is obsolete and uneconomical, and that condominium owners holding in aggregate more than 50 percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than 70% interest in the 116

common areas are opposed to the continuation of the condominium regime after expropriation or condemnation of a material proportion thereof; or e) That the conditions for such partition by sale set forth in the declaration of restrictions duly registered in accordance with the terms of this Act, have been met. SECTION 9. The owner of a project shall, prior to the conveyance of any condominium therein, registered a declaration of restrictions relating to such project, which restrictions shall constitute a lien upon each condominium owners in the project, and shall insure to and bind all condominium owners in the projects. Such liens, unless otherwise provided, may be enforced by any condominium owner in the project or by the management body of such project. The Register of Deeds shall enter and annotate the declaration of restrictions upon the certificate of title covering the land included within the project, if the land is patented or registered under the Land Registration or Cadastral Acts. The declaration of restrictions shall provide for the management of the project any anyone of the following management bodies: a condominium corporation, an association of the condominium owners, a board of governors elected by condominium owners, or a management agent elected by the owners of by the board named in the declaration. It shall also provide for voting majorities, quorums, notices, meeting date, and other rules governing such body bodies. Such declaration of restrictions, among other things, may also provide: a) As to any management body: 1. For the power thereof, including power to enforce the provisions of the declaration of restrictions; 2. For Maintenance of insurance policies insuring condominium owners against loss by fire, casualty, liability, workmen's compensation and other insurable risk and for bonding of the members of any management body; 3. Provisions for maintenance, utility, gardening, and other service benefiting the common areas, for the operation of the building, and legal, accounting and other professional and technical services; 4. For purchase of materials, supplies and the like needed by the common areas; 5. For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and discharge of any encumbrance levied against the entire project of the common areas; 6. For reconstruction of any portion or portions of and damage to or destruction of the project; 7. the manner for delegation of its powers; 8. For entry by its officers and agents into any unit when necessary in connection with the maintenance or construction for which such body is responsible; 9. For a power of attorney to the management body to sell the entire project fot the benefit of all the owner thereof when partition of the project may be authorized under Section 8 of this Act, which said power shall be binding upon all of the condominium owners regardless of whether they assume the obligations of the restrictions or not. b) The manner and procedure for amending such restrictions, Provided, that the vote of not less than a majority in interest of the owner obtained. c) For independent audit of the accounts of the management body; d) For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed separately for its share of such expenses in proportion (unless otherwise provided) of its power's fractional interest in any common areas; e) For the subordination of the liens securing such assessments to other liens either generally or specifically described; f) For conditions, other than those provided for in Sections 8 and 13 of this Act, upon which partition of the project and dissolution of the condominium may be made. Such right to partition or dissolution may be conditioned upon failure of the condominium owners to rebuild within a certain period or upon specified percentage of damage to the building, or upon a decision of an arbitrator, or upon any other reasonable condition. SECTION 10. Whenever the common areas in acondominium project are held by a condominium corporation, such corporation shall constitute the management body of the project. The corporate of such a corporation shall be limited to the holding of the common areas; either in ownership or any other in real property recognized by law, to the management of the project, and to such other purposes as may be necessary, incident or convenient to the accomplishment of said purpose. The articles of incorporation or by-laws of the corporation shall not contain any provision contrary to our inconsistent with the provisions of this Act, the enabling or master deed, or the declaration of restrictions of the project. Membership in a condominium corporation, regardless of whether it is stock or non-stock corporation, shall not be transferable separately from the condominium unit which it is an appurtenance. When a member or a stockholder cease to own a unit in the project in which the condominium 117

corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium corporation. SECTION 11. The term of a condominium corporation shall be coterminous with the duration of the condominium project, the provisions of the Corporations Law to the contrary notwithstanding. SECTION 12. In case of involuntary dissolution of a condominium corporation for any of the cause provided by law, the common areas owned or held by the condominium shall, by way of liquidation, be transferred proindiviso and in proportion to their interest in the corporation to the members or stockholders thereof, subject to the superior rights of the corporation creditors. Such transfer or conveyance shall be deemed to be full liquidation of the interest of such members or stockholders in the corporation. After such transfer or conveyance, the provisions of this Act governing undivided co-ownership of, or4 undivided interest in, the common areas in condominium project shall fully apply. SECTION 13. Unit enabling or the master deed of the project in which the condominium corporation owns the common areas is revoked, the corporation shall not be voluntarily dissolved through for dissolution under Rule 104 of the Rules Court except upon a showing: a) That the years after damage or destruction to the project in which the corporation owns or holds the common areas, which damage or destruction renders a materials part thereof, unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or b) The damage or destruction to the project has rendered one-half or more of the units therein untenantable and that more than 30 percent of the members of the corporation, if non-stock, or the shareholders representing more than 30 percent of the capital stock entitle to vote, if a stock corporation, are opposed to the repair or reconstruction of the project; or c) That the project has been in existence in excess of 50 years, that it is obsolete and uneconomical, and that more than 50 percent of the members of the corporation if non-stock, or stockholders representing more than 50 percent of the capital stock entitle to vote, if a stock corporation, are opposed to the repair or restoration or remodeling or modernizing of the project; or d) That the project or material part thereof has been condemned or expropriated and that the project is no longer viable of that the members holding in aggregate more than 70 percent interest in the corporation if non-stock, or the stockholders representing more than 70 percent of the capital stock entitle to vote, if a stock corporation, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or e) That the conditions for such dissolution set forth in the declaration of restrictions of the project in which the corporation owns or holds the common areas, have been met. SECTION 14. The condominium may also be dissolved by the affirmative vote of all the stockholders or members thereof at a general or special meeting duly called for the purpose; Provided, that all the requirements of Section 62 of the Corporation Law are complied with. SECTION 15. Unless otherwise provided for in the declaration of restrictions, upon voluntary dissolution of a condominium corporation in accordance with the provisions of Section 13 and 14 of this Act, the corporation shall be deemed to hold a power of attorney from all the members or stockholders to sell and dispose of their separate interests in the project and liquidation of the corporation shall be effected by a sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporation and of individuals condominium creditors. SECTION 16. A condominium corporation shall not during its existence, sell, exchange, lease or otherwise depose of the common areas owned or held by it in the condominium project unless authorized by the affirmative vote of a simple majority of the registered owners: Provided, that prior notifications to all registered owners: are done: and Provided, further, that the condominium corporation may expand or integrate the project with another upon the affirmative vote of a simple majority of the registered owners: Provided, that prior notifications to all registered owners are done: and Provided, further, that the condominium corporation may expand or integrate the project with another upon the affirmative vote of a simple majority of the registered owners, subject only to the final approval of Housing and Land Use Regulatory Board. (As amended by R.A. No. 7899, approved Feb. 23, 1995) SECTION 17. Any provisions of the Corporation Law to the contrary notwithstanding, the by-laws of a condominium corporation shall provide that a stockholder or member shall not be entitle to demand payment of his share or interest in those case where such right is granted under the Corporation Law unless he consents to sell his separate interest in the project to the corporation or to any purchaser of the corporation's choice who shall also buy from the corporation the dissenting member or stockholder's interest. In case of disagreement as to price, the 118

procedure set forth in the appropriate provision of the Corporation Law for valuation of shares shall be allowed. The corporation shall have two years within which to pay for the shares or furnish a purchaser of its choice from the time of award. All expenses incurred in the liquidation of the interest of the dissenting member or stockholder shall be borne by him. SECTION 18. Upon registration of an instrument conveying a condominium, the Register of Deeds shall, upon payment of the proper fees, enter and annotate the conveyance on the certificate of title covering the land included within the project and the transferee shall be entitled to the issuance of a "condominium owner's" copy of the pertinent portion of such certificate of title. Said "condominium owner's" copy need not reproduce the ownership status or other condominium in the project. A copy of the description of land, a brief description of condominium conveyed, name and personal circumstances of the condominium owner would be sufficient for purposes of the "condominium owner's" copy of the certificate of title. No conveyance of condominiums or part thereof, subsequent to the original conveyance thereof from the owner of the project, shall be registered unless accompanied by a certificate of the management body of the project that such conveyance is in accordance with the provisions of the declaration of restrictions such project. In cases of condominium projects registered under the provisions of the Spanish Mortgage Law or Act 3344, as amended, the registration of the deed of conveyance of a condominium shall be sufficient if the Register of Deeds shall keep the original or signed copy thereof, together with the certificate of the management body of the project, and return a copy of the deed of conveyance to the condominium owner duly acknowledge and sampled by the Register of Deeds in the same manner as in the case of registration of conveyances of real property under said laws. SECTION 19. Where the enabling or master deed provides that the land included within a condominium project are to be owned in common by the condominium owners therein, the Register of Deeds may, at the request of all the condominium owners and upon surrender of all their "condominium owner's" copies, cancel the certificates of title of the property and issue a new one in the name of the said condominium owners as pro-indiviso co-owners thereof. SECTION 20. An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, cost (including attorney's fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon as may be authorized by the declaration of restrictions, a description of condominium unit against which same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges of other satisfaction thereof, the management body shall cause to be registered a release of the lien. Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances. Such liens may be enforced in the same manner provide for by law for the judicial or extra-judicial foreclosure of mortgages of real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the same right of redemption as in case of judicial or extra-judicial foreclosure of mortgages. SECTION 21. No labor performed or service or material furnished without the consent of or at the request of a condominium owner of his agent or his contractor or sub contractor, shall be the basis of a lien against condominium of any other condominium owner, unless such other owner have expressly consented to or requested the performance of such labor of furnishing of such materials or service. Such express consent shall be deemed to have been given by the owner of any condominium in the case of emergency repairs of his condominium unit. Labor performed or services or materials furnished for the common areas, if duly authorized by the management body provided for in a declarations governing the property, shall be deemed to be performed or furnished with the express consent of each condominium owner. The owner of any condominium may remove his condominium from a lien against two of the lien or the fraction of the total sum secured by such lien which is attributable to his condominium unit. SECTION 22. Unless otherwise provided for the declaration of restrictions, the management body provided for herein, may acquire and hold, for the benefit of the condominium owners, tangible personal property and may dispose of the same by sale or otherwise, and the beneficial interest in such personal property shall be owned by the condominium owners in the same proportion as their respective interest in the common areas. A transfer of a condominium shall transfer to the transferee ownership of the transferor's beneficial interest in such personal property.

119

SECTION 23. Where, in an action for partition of a condominium corporation on the ground that the project or a material part thereof has been condemned or expropriated, the court finds that the conditions provided in this Act or in the declaration of restrictions have not been met, the Court may decree a reorganization of the project declaring which portion or portions of the project shall continue as a condominium project, the owners thereof, and the respective rights of the remaining owners and the just compensation, if any, that a condominium owner may be entitle to due deprivation of his property. Upon receipt of a copy of the decree, the Register of Deeds shall enter and annotate the same on the pertinent certificate of title. SECTION 24. Any deed, declaration or plan for a condominium project shall be liberally construed to facilitate the operation of the project, and its provision shall be presumed to be independent and severable. SECTION 25. Whenever real property has been divided into condominium, each condominium separately owned shall be separately assessed, for purpose or real property taxation and other tax purposes, to the owners thereof, and tax on each such condominium shall constitute a lien solely thereon. SECTION 26. All Acts or parts of Acts in conflict or inconsistent with this Act are hereby amended insofar as condominiums and its incidents are concerned. SECTION 27. This Act shall take effect upon its approval.

APPOVED, JUNE 18, 1966

K. PROVISION UNDER PD 957 APPLIED TO CONDOMINIUM PROJECTS 1.

DUTIES AND RESPONSIBILITIES OF OWNERS/DEVELOPERS OF SUBDIVISION AND CONDOMINIUM PROJECTS UNDER PD 957 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Mortgage: Section 18 Advertisements: Section 19 Time of Completion: Section 20 Alteration of Plan: Section 22 Non-Forfeiture or Payments: Section 23 Issuance of Title: Section 25 Donations of Open Spaces: Section 31, as amended by PD 1216 Organization of Homeowners Association: Section 30 Realty Taxes Payment: Section 26 Other Charges: Section 27

OTHER REALTY HOLDINGS

120

Basic Principle of Ecology Ecology (from the Greek: , oikos, "household"; and , logos, "knowledge') is the scientific study of the distribution and abundance of life and the interactions between organisms and their environment. The word "ecology" is often used more loosely in such terms in common parlance as a synonym for the natural environment or environmentalism. A. Law on creation of DENR Executive Order No. 192 dated June 10, 1987 "Providing for the Reorganization of the Department of Environment, Energy and Natural Resources, Renaming it as the Department of Environment and Natural Resources, and for other Purposes" The Department is mandated to be the primary agency responsible for the conservation, management, development, and proper use of the country's environment and natural resources. To accomplish this mandated, the Department shall be guided by the following objectives: 1. Assure the availability and sustainability of the country's natural resources through judicious use and systematic restoration or replacement, whenever possible; 2. Increase the productivity of natural resources in order to meet the demands for forest, mineral, and resources of a growing population; 3. Enhance the contribution of natural resources for achieving national economic and social development; 4. Promote equitable access to natural resources by the different sectors of the population; 5. Conserve specific terrestrial and marine areas representative of the Philippines natural and cultural heritage for present and future generations. B. Terms-Definition 1. ENVIRONMENTAL IMPACT ASSESSMENT (EIA) An Environment Impact Assessment (EIA) is a "process that involves predicting and evaluating the likely impacts of a project (including cumulative impacts) on the environment during construction, commissioning, operation and abandonment. It also includes designing appropriate preventive, mitigating and enhancement measures addressing these consequences to protect the environment and the community's welfare". 2. ENVIRONMENTAL COMPLIANCE CERTIFICATE A certificate of Environment Compliance Commitment to which the Proponent conforms to, after DENR-EMB explains the ECC conditions, by signing the sworn undertaking of full responsibility over implementation of specified measures which are necessary to comply with existing environmental regulations or to operate within best environment practices that are not currently by existing laws. Content of an ECC An ECC shall contain specific measure and conditions that the project Proponent has to undertake before and during the operation of a project, and in some cases, during the project's abandonment phase to mitigate identified environment impacts. In general, the following are salient features of an ECC:  Scope of project or undertaking  Conditions conformed with by the Proponent to implement the mitigation measures for potentially negative impacts and/or enhancement measures for potentially positive impacts as identified in the EIA Report.  Suggestions/recommendations to assist LGUs and other agencies of the government to incorporate the EIA Results in their decision-making process. 3. CERTIFICATE OF NON-COVERAGE (CNC) A Certificate of Non-Coverage (CNC) is issued by the EMB certifying that, based on the submitted project description; the project is not covered by the EIS System and is not required to secure an environment compliance certificate or ECC 4. ENVIRONMENTALLY CRITICAL PROJECT (ECP) Projects belonging to protect types declared thru Proclamation No. 2146 and Proclamation No. 803 which may pose significant negative environmental impact at certain thresholds of operation regardless of location. Updating of technical descriptions of ECPs is vested on the DENR-EMB thru Section 2-d of AO 42 (2002), in coordination with the DTI as provided for in Section 3-A of AO 42. 5. ENVIRONMENTALLY CRITICAL AREA (ECA) A general area declared thru Proclamation 2146 as environmentally sensitive such that significant environmental impacts are expected if certain types/thresholds of proposed projects are located, developed or implemented in it. Updating of technical descriptions of ECAs is vested on the DENR-EMB thru Section 2-D of AO 42 (2002). 121

DEPARTMENT OF ENVIRONMENTAL AND NATURAL RESOURCES ENVIRONMENTAL MANAGEMENT BURUE (DENR-EMB)

PHILIPPINE ENVIRONMENTAL LAWS OVERVIEW 1. 2. 3. 4. 5.

R.A 9275 (Clean Water Act of 2004 ) R.A. 8749 (Clean Air Act of 1999) R.A 6969 (Toxic and Hazardous and Nuclear Waste Control Act of 1990) R. A 9003 (Ecological Solid Waste Mgt Act of 2000) P.D. 1586 (Environmental Impact Assessment )

R.A. 9275 –CLEAN WATER ACT    

REGULATES THE DISPOSAL OF WASTEWATER TO ANY WATERBODY REQUIRE INDUSTRIES TO SECURE DISCHARGE PERMIT BEFORE DISCHARGING DISCHARGE RATE OF POLLUTANTS (BOD & TSS) – P5 PER KG OF POLLUTANT VIOLATIONS, FINES :(P 10T-200T)

R.A. 8749 – CLEAN AIR ACT  REGULATES EMISSIONS OF AIR POLLUTANTS FROM STATIONARY AND MOBILE SOURCES  REQUIRES PERMIT TO OPERATE (PO) Air Pollution Source Equipment (APSE) and Air Pollution Control Facility (APCF)  VIOLATIONS: FINES – P10T -P100T R.A. 9003 (ECOLOGICAL SOLID WASTE MANAGEMENT ACT  REQUIRES SEGREGATION OF WASTES AT SOURCE , PROPER COLLECTION AND DISPOSAL OF WASTES  LGU AS THE LEAD AGENCY FOR ENFORCEMENT  DENR-EMB PROVIDES TECHNICAL ASSISTANCE R.A. 6969 – TOXIC, HAZARDOUS AND NUCLEAR WASTES ACT 

REGULATES, RESTRICTS & PROHIBITS THE IMPORTATION, MANUFACTURE, PROCESSING, SALE, DISTRIBUTION, USE AND DISPOSAL OF CHEMICAL SUBSTANCES AND MIXTURES THAT PRESENT UNREASONABLE RISK AND OR INJURY TO HEALTH OR THE ENVIRONMENT, TO PROHIBIT THE ENTRY EVEN IN TRANSIT, OF HAZARDOUS AND NUCLEAR WATES AND THEIR DISPOSAL INTO PHILIPPINE TERRITORIAL LIMITS FOR WHATEVER PURPOSE.

PD 1586 

Principle: Planning tool that requires a proposed project to undergo EIA process before actual implementation. Guidelines: project category – A. environmentally critical projects B. projects located in ECA C. projects falls in the category of non-coverage PD 1586 – Environmental Aspects         

1. Land - soil / land modification 2. Air - air quality 3. Water - water contamination, water pollution 4. People - roadways , economic attribute Project Phases : 1. Pre Construction 2. Construction 3. Operation 4. Abandonment

PD 1586 – Environmental Aspects   

1. Land 2. Air 3. Water

- soil / land modification - air quality - water contamination, water pollution 122

     

4. People - roadways , economic attribute Project Phases : 1. Pre Construction 2. Construction 3. Operation 4. Abandonment

REVISED PROCEDURAL MANUAL FOR DENR ADMINISTRATIVE ORDER NO. 30 SERIES OF 2003 (DAO 03-30) Project Grouping Matrix for Determination of EIA Report Types Types of Reports -Environmental Impact Statement -Initial Environmental Examination Report -Initial Environmental Examination Checklist Infrastructure / Subdivision -Certificate of Non-Coverage Form Documentary Requirements - Request Letter - IEE Report - Proof of Ownership - Site Development Plan - Impact Management Plan - Environmental Monitoring Plan - Project Environment Monitoring and Audit Prioritization Scheme - Panoramic Pictures of the Project site - Geographical Coordinates - Email Address - Contact Number - Zoning Certification - Letter address to MGB (Eggar) PROCESS FLOW Documentary Requirements

EMB REVIEW

PROJECT IMPLEMENTATION

ECC

Important:: Non-compliance --- fine of P50,000.00

IEE Checklist for Housing Dev't Projects

I.

INTRODUCTION The Philippine Environmental Impact Statement System was formally established by virtue of

Presidential Decree 1586.

It requires the submission of Environmental Impact Statements (EIS) for

environmentally critical projects and Initial Environmental Examination (IEE) for projects which are located in environmentally critically areas as provided in its Implementing Rules and Regulations (IRR) and Presidential Proclamation No. 2146, series of 1981.

123

In 1996 DENR issued Department Administrative Order 37 (DAO 96-37) to further strengthen the EIS System. DAO 96-37 Article III, Section 9.0 (Contents of the EIS) provides that “Some or all of the foregoing items may, when appropriate, be presented in a format using the checklist approach.” Pursuant to DAO 96-37, Memorandum Circular Number 4, Series of 1998 was issued by the Environmental Management Bureau (EMB) to simplify the system.

MC 98-4 (Annex 1) defined the IEE

Checklist as a simplified form in lieu of the standard EIS document.

It provides a list of projects with IEE

checklists, the format and contents of the IEE Checklist and implementing guidelines. To further assist development of projects in ECAs while ensuring that environmental requirements are incorporated in project development, MC 3 Series of 2001 (Annex 2) by EMB presents an additional list of projects with IEE Checklists and refines the implementing guidelines for the preparation and submission of IEE Checklists. B. Contents of this Guide This guide is produced to aid the proponent in preparing and submitting an IEE Checklist to secure an Environmental Compliance Certificate (ECC) for a project located in ECAs. This guide contains the following: Part II-

Scope and Coverage of the IEE Checklist for Selected Housing, Land Development and Other Building Projects

Part III

Instructions for the Preparation and Submission of the IEE Checklist

Part IV

IEE Checklist Form

Part V

Annexes: A. Definition of Terms of IEE Checklist for Selected Housing, Land Development and Other Building Projects B.

EMB Regional Offices Directory

SCOPE AND COVERAGE This section defines the scope and limitations to be covered and affected by this IEE checklist. Such that projects with greater and/or lower than the defined scope, the proponent shall be required to submit an Initial Environmental Examination (IEE) or an Environmental Impact Statement (EIS) document or secure a Certificate of Non-Coverage (CNC). The accompanying IEE Checklist is applicable only for housing, land development and other building development projects that include the following: 1.

Residential Structures a. Apartments – with livable floor area of above 1,000 m2 b. Condominiums and Apartelles – regardless of area c. Motels and Hotels – 1,000 m2 of livable facilities area and below

2.

Commercial and Business Centers a. Food Handling/Services – 1,000 m2 of floor facilities area and below (except for kiosk type and mobile fastfoods) b. Funeral Parlors – regardless of area c. Others (offices, retailers, wholesalers, etc.) – above 1,000 m2 to 10,000 m2 of floor facilities area

3.

Institutional a. Educational/School Structures – above 1,000 m2 to 10,000 m2 of floor facilities area b. Religious Buildings/Facilities – above 1,000 m2 of floor facilities area c.

4.

Hospital and Medical Buildings/Facilities – 1,000 m2 of floor facilities area and below

Housing and Land Development 124

a. Resettlement – 10 hectares of land area and below b. Economic and Socialized Housing – Less than 5 hectares of land area c. Open Market Housing – Less than 5 hectares of land area d. Projects under Community Mortgage Program (CMP) – Off-site CMPs II.

INSTRUCTIONS ON THE PREPARATION AND SUBMISSION OF THE IEE CHECKLIST This section guides the project proponent on how to fill-up and answer the various questions and

information stated in the checklist. This section also informs the project proponent on permit requirements that need to be attached to the Checklist. Likewise, it directs the proponent where to submit the IEE Checklist and apply for an ECC, the system and timeframe for DENR processing. A.

Contents of the IEE Checklist The IEE Checklist is a simplified form designed to assist proponents' of selected projects in complying

with the EIS system. The IEE Checklist, to be accomplished and submitted before undertaking a project, consists of a series of questions that deals with issues and concerns about the proposed project and its environment. The questions will also provide the proponents with information on environmental impacts, both positive and negative, which will be caused by the proposed project. The IEE Checklist has to be submitted by all government and private sector proponents applying for an ECC covering the abovementioned projects. The information contained herein will serve as basis for EMB to make decision on the application for ECC. The IEE Checklist is divided into five (5) major sections: 

B. 1.

2.

3.

4.

5.

Section 1. Required Information - consist of the attachments required to be submitted as part of the IEE Checklist  Section 2. General Information – presents the project title, name and address of the project proponent, proponent's contact person and the location of the project;  Section 3. Project Description- presents the plan/design components and activities during the construction and operation phases of the project;  Section 4. Description of Project Surroundings - describes the existing physical, biological and socio-economic conditions where the project will be located;  Section 5: Predicted and Assessed Impacts and Proposed Mitigation Measures –describes the possible impacts that are likely to occur in various stages of the project development and the corresponding mitigation and enhancement measures to prevent and/or minimize the occurrence of adverse impacts and strengthen the positive effects of the project; Instructions on the Preparation of the IEE Checklist For the Section 1: Required Information, write a check mark () on the title or description of the document to be submitted. The listed documents are MUST requirements and should be submitted. Otherwise, the application will not be accepted. The IEE Checklist can be prepared by the proponent or any of his/her authorized representative per EMB Memorandum Circular No. 04, Series of 1998 (17 August 1998). The proponent's signature in the report shall be sufficient. The proponent may seek the help of the DENR personnel by clarifying questions in the IEE Checklist. To use the Checklist, the proponent may put a check () mark in the appropriate box. If your answer does not fall in any of the pre-determined responses, check () OTHERS and indicate your specific answer in the blank space provided or use additional sheets as necessary. If some questions are not applicable to your project, write N/A on the blank space or column. To facilitate and assist the proponent in answering Section 5 of this checklist, a menu is provided to serve as guide and reference. However, it should be noted that this only serves as a menu checklist hence, the proponent is highly encouraged to identify additional impacts and mitigation/enhancement measures other than those provided. The proponent may put a check () to the columns of Y or N on the pre-determined and identified Mitigation/Enhancement measures column. The proponent may choose the mitigating measures appropriate to the impacts identified for the proposed project. He/She may write clarificatory words/phrases in the column of REMARKS. Answers to the questions are not be strictly confined to the pre-determined responses. The proponent may elaborate and use as many additional sheets as needed to be able to provide adequate answers to the required information. Maps, pictures, drawings (e.g. charts, tables, diagrams, sketches) and other visual aids are deemed to provide better description of the information provided in the Checklist. These will help EMB in understanding the proposed project, and make decision on the application for ECC.

125

1. C. Instructions on the Submission of the IEE Checklist Upon completion of the IEE checklist, the project proponent shall submit one (1) set of the Checklist at the EIA Section of the EMB Regional Office where the project is to be located. A duly accomplished Procedural Screening Form shall accompany the IEE Checklist submission. 2. Upon the presentation/submission of the Checklist, the Screening Officer shall immediately determine its completeness and conformance with the DENR prescribed requirements. Immediate determination shall mean completion of the Procedural Review within the same day of IEE checklist submission. 3. The Screening Officer shall indicate, through a check/tick mark under the Yes, No or Not Applicable column, the presence or absence of a particular information required. 4. The determination of the completeness of the IEE Checklist will be based on the sufficiency of responses to all questions or checklist and information provided in the matrix. 5. If the IEE Checklist is complete, it will be formally accepted. The proponent will be furnished a copy of the accomplished procedural form duly signed by the Screening Officer. 6. If the Checklist is incomplete, it shall be immediately returned to the proponent for revision or submission of the missing requirement/information. The reason for non-acceptance shall be stated in writing at the appropriate place in the form. 7. If the IEE Checklist has complied with all the DENR prescribed requirements, the proponent shall submit 3 copies of the documents to EIA Section of the concerned EMB Regional Office. The proponent shall pay the amount of P3,000.00 at the Cashier Section of concerned EMB Regional Office upon submitting the required number of copies at the Record Section of the same office. 8. All IEE Checklist not following the said standard procedures shall not be considered as valid applications and therefore, shall not be used as a basis for recommendation on the issuance or denial of the ECC. 9. The project proponent or his duly recognized representative shall be the one who will follow-up the said application to the respective EMB Regional Office. The processing time including the issuance and/or denial of the ECC will take a maximum of 30 days. 10. The EIA Section of EMB Regional Office, in the course of substantial review, may conduct site visit or ocular inspection in coordination with the project proponent 11. If the EMB finds that the IEE Checklist has substantially addressed all the significant impacts and relevant issues by way of mitigation and enhancement measures, it shall recommend the issuance of the ECC. The EMB Regional Office may call for a technical conference to explain to the project proponent the relevance of the ECC and the various conditions stated therein for compliance by the project proponent. 1.

126

Real estate financing, taxation & appraisal

 Real Estate Financing/Pag-Ibig Housing Loan  Real Estate Taxation  Real Estate Assessment for Property Taxation  Real Estate Economics  Real Estate Appraisal

REAL ESTATE FINANCING METHODS of PAYING FOR PROPERTY ACQUISITION 1. Cash basis 2. Non-cash basis: swap 3. Gratuitous basis: free, no payment made such as in inheritance & donation 4. Formation of cooperative: as in the Community Mortgage Program (CMP) 5. Joint venture: between landowner & developer 127

6. Installment basis (loan or mortgage): Downpayment + regular amortization REAL ESTATE LOANS  Banks & financial institutions  The multi-window lending system: (Pag-Ibig, SSS & GSIS) LOANS from BANKS & FINANCIAL INSTITUTIONS As per controls set by the Bangko Sentral ng Pilipinas:  Real estate loan exposure should not exceed 20% of the total loan portfolio of the bank or financial institution  Loan-to-value ratio is limited to a maximum of 60% of the assessed value of the property offered as collateral % CSV REMARKS YEARS LOAN PURPOSES 1. Purchase of an existing residential unit which may be a house & lot, a condominium unit, a townhouse or a rowhouse 2. Construction of a new house or dwelling unit on a lot owned by a Pag-Ibig member 3. Purchase of a lot & construction thereon of a new house or dwelling unit 4. Purchase with assumption of mortgage of an existing residential unit previously financed 5. Purchase of an existing residential unit foreclosed by a lending window or bought back by the developer 6. Purchase of a lot under the NHA site & services program 7. Home improvement: any alteration in an existing residential unit intended by the homeowner to be a permanent integral part thereof, which will enhance its durability & material value OFFICIAL APPRAISAL  For owner-built houses: The lending window shall have the option to select the appraiser which may either be: the originating bank, its duly-designated appraiser or the Home Guaranty Corp. (HGC)  For mass housing project: The HGC INSURANCE COVERAGE  Mortgage Redemption Insurance (MRI): Life insurance coverage for the principal with the lending institution as the beneficiary  Fire insurance: For the property RA#6552:REALTYINSTALLMENTBUYERPROTECTIONACT (The Maceda Law) An act to provide protection to buyers of real estate on installment basis DECLARED PUBLIC POLICY: It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous & oppressive conditions. COVERAGE: Sale or financing of real estate on installment payments, including residential condominium or apartments where the buyer has paid at least two (2) years of installment. EXCLUDED: 1. Industrial lots 2. Commercial buildings 3. Sale to tenants In case more than two years of installments were paid, rights of the buyer in case of default in payment of succeeding installments: 1. To pay, without additional interest, the unpaid installments due within the grace period earned which is one month grace period for every year of installment payments made. 2. However, this right shall be exercised by the buyer only once every five (5) years of the life of the contract & its extension(s). 3. If the contract is cancelled, the seller shall refund the buyer the cash surrender value of the payments on the property equivalent to 50% of the total payments made. 4. After five (5) years of installments, 5% will be added every year but not to exceed 90% of total payments made. 5. The actual cancellation or the demand for rescission of the contract is by notarial act & only upon full payment of the cash surrender value to the buyer. 6. Down payments & option deposits shall be included in the total installment payments made.

THE MATHEMATICS:

128

50%

First 2 years

2

50%

Up to 5th year

5

After 5 years, add 5% per year: 90%

Maximum

Less: 50%

Earned after 5 years

40%

Can still be earned

40%/5% per year

Years to earn extra 40%

8

Total years to maximize CSV

13

OTHER RIGHTS OF THE BUYER 1. Buyer shall have the right to sell his rights or assign the same to another person. The deed of sale or assignment shall be done by notarial act. 2. Buyer shall have the right to reinstate the contract by updating the account during the grace period or before actual cancellation of the contract. 3. Buyer shall have the right to pay in advance any installment or the unpaid balance of the purchase price (balloon payment) at any time without interest. Rights in case less than two years of instalments were paid: 1. Seller shall give buyer a grace period of not less than sixty (60) days from the date the installment became due. 2. If the buyer fails to pay the installment due at the expiration of the grace period, the seller may cancel the contract after thirty (30) days from receipt of the buyer of the notice of cancellation or the demand for rescission of the contract by notarial act. TOTAL GRACE PERIOD: Ninety (90) days BASIC COMPUTATION A very important formula for the computation involving real estate financing is: MONTHLY AMORTIZATION [MA] = Principal to be Financed x Amortization Factor where, Amortization Factor = Factor based on the no. of years payment and interest rate or, MA = P x Factor

A. SAMPLE PROBLEM 1 Ms. Roxas pays a monthly amortization of P54,100.00 for a parcel of land. The amortization factor for 5 years at 21% interest is 0.02705. If Ms. Roxas paid a downpayment of 20% of the contract price, compute the following: a. b. c.

The principal obligation on which the monthly amortization is based. The contract price The amount of downpayment

Solution: a) Principal Balance = Mo. Amortization Factor

= P54,100.00 02705

= P2,000,000.00

b) Contract Price

= Balance (100%-20%)

= P2,000,000.00 80%

= P2,500,000.00

c) Downpayment

= 20% of P2,500,000.00 129

B. SAMPLE PROBLEM: LOAN/BALANCE OUTSTANDING Juancho bought a 1,060 sqm. lot at P1,400.00 sqm. on installment basis with 50% downpayment and the balance payable in 5 years at 21% interest per annum. After 3 regular monthly amortizations, he decided to pay in the full the balance. Compute the following: (Factor is 0.02705) a. b. c. d. e.

Amount of downpayment Monthly amortization Interest expense for 3 months Balance after 3 months Final cost/sqm. after full payment

Solution: a) Downpayment = 1,060 sqm. x P1,400.00/sqm. x 50% =

P742,000.00

b) Monthly amortization = Principal Balance x factor = P742,000.00 x 0.02705 = P20,701.10 c) Amortization

Interest

Principal

Balance

P20,071.10 20,071.10 20,071.10

P12,985.00 12,860.99 12,734.81

P7,086.10 7,210.01 7,336.29

P742,000.00 734,913.90 727,703.89 720,367.60

Total Interest

P38,580.80

d) P720,367.60 e) Total payments made Downpayment

=

P742,000.00

Total Installment Payments

= =

P20,071.10 x 60 mos. P1,204,266.00

Plus Downpayment

= =

742,000.00 P1,946,266.10

Total price/sqm

= =

P1,946,266.10/1,060 sqm. P1,836.00/sqm.

NOTES:    

Monthly interest is 21% divided by 12 months = 1.75% 1.75% of previous balance = amount applied to interest Amortization less interest = Amount applied to principal Previous balance less amount applied to principal = New principal balance

Housing Loan Seminar Cebu City Branch Pag-IBIG Fund End-User Home Financing Program HDMF Circ. 247

Pag-tutulungan sa kinabukasan Ikaw Bangko 130

Industriya Gobyerno Eligibility 1. Must be an active member of Pag-IBIG Fund. Must have at least 24 monthly contributions with a 1 year residency requirement. 2. Must not be more than 65 years old at date of loan application, and must be insurable. - age at loan application plus repayment term should not go beyond 70 years old. 3. Must have the legal capacity to acquire and encumber real property 4. Must have passed satisfactory background /credit investigation. - Check on employment status, credit standing, etc. 5. Must have no outstanding Pag-IBIG Housing Loan, either as principal or co-borrower. - a co-borrower signify an intention to avail of Pag-IBIG Housing Loan for himself, he shall be allowed to do so provided the tacked loan is updated and the amount proportionate to his loan entitlement has been fully paid. 6. Must have no Pag-IBIG Housing Loan that was foreclosed, cancelled, bought back due to default, or subjected to dacion en pago, which shall include cases where the borrower is no longer interested to pursue the loan and surrenders the property. 7. Has no outstanding Pag-IBIG Multi-Purpose Loan in arrears at the time of loan application. - updating of the MPL is allowed in order to qualify for the HL. Loan Purpose • Purchase of a fully developed lot not exceeding 1,000 sq. m. and must be within residential area. • Construction or completion of house on a lot owned by the borrower. (accommodation mortgage where the owner of the lot is not the borrower but must be related up to the 2nd degree of consanguinity or up to 1st civil degree of affinity). • Purchase of lot and construction of house thereon • Home Improvement (Minor & Major Improvement) • Refinancing of an existing mortgage loan with an institution acceptable to the Pag-IBIG Fund. (said loan has a repayment history of at least 2 years and is not in default within 12 months prior to date of loan application) Combination of loan purposes shall be limited to the following:  Purchase of a Residential Unit with Home Improvement  Refinancing of an existing mortgage with Home Improvement  Refinancing of a Lot account with House Construction Major Requirements Basic Facilities: 1. Source of Electricity 2. Source of Water 3. Drainage System 4. Road Right of Way 5. Monuments 6. Free from Squatters Other Requirements: 1. Purchase of Lot - Clean Title (in the name of Seller) - Check Payable to Seller AND Buyer/Borrower 2. House Construction - 2 meter setback/ Firewall/ High Fence (1 layer CHB from roofline) - Initial Put-up (at least 10% or more, depending on the approved loan and appraisal value) Loanable Amount A qualified member shall be allowed to borrow an amount up to a maximum of THREE MILLION PESOS (P 3,000,000.00) which shall be based on the four (4) factors, whichever is lowest.  Pag-IBIG contributions  Loan-To-Collateral Ratio  Member’s Actual Need  Capacity to Pay Based on Pag-IBIG Contributions MONTHLY CONTRIBUTIONS POP Pag-IBIG I & II

LOAN ENTITLEMENT 131

P950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 1,450

US/Can$ equivalent at point of availment

Over Over Over Over Over Over Over Over Over Over Over

P 1,900,000 - P 2,000,000 P 2,000,000 - P 2,100,000 P 2,100,000 - P 2,200,000 P 2,200,000 - P 2,300,000 P 2,300,000 - P 2,400,000 P 2,400,000 - P 2,500,000 P 2,500,000 - P 2,600,000 P 2,600,000 - P 2,700,000 P 2,700,000 - P 2,800,000 P 2,800,000 - P 2,900,000 P 2,900,000 - P3,000,000

Based on Loan to Collateral Ratio APPROVED LOAN

Appraisal % w/ Buyback without Buyback/Retail Up to P400,000 100% 100% Over P400,000 – P750,000 100% 90% Over P750,000 – P1,250,000 95% 85% Over P1,250,000 – P3,000,000 90% 80% Based on Actual Need Refers to the amountas stated on the Contract to Sell, License to Sell, Amount Applied or Cost Estimates. Based on Capacity to Pay A member’s loan entitlement shall be limited to an amount for which the monthly repayment on principal and interest shall not exceed 40% of the member’s or family’s net disposable income. NET DISPOSABLE INCOME = Gross Family Income less statutory deductions, and monthly amortizations on outstanding loans. Gross family Income shall pertain to income of the member, his parents, legitimate spouse and unmarried children, provided they are living with the borrower. On the other hand, the income of a relative within the 2 nd civil degree of consanguinity shall only be considered as part of the gross family income if he shall act as coborrower to a tacked loan. Example : less

Gross Income = P 12,000.00 Deductions - 2,000.00 Net Income = P 10,000.00

Allowable Monthly Amortization

= P 10,000.00 x 40% = P 4,000.00

Interest Rates ON OR BEFORE THE DUE LOAN AMOUNT DATE Up to P400,000 6% Over P400,000-P750,000 7% Over P750,000-P1,000,000 8.5% Over P1,000,000-P1,250,000 9.5% Over P1,250,000-P2,000,000 10.5% Over P2,000,000-P3,000,000 11.5% • REPRICING - for loans up to P400,000 , Pag-IBIG may reprice the interest rate every 3 years provided it shall not exceed the original rate. Over P400,000-P750,000 9% Over P750,000-P1,000,000 10.5% Over P1,000,000-P1,250,000 11.5% Over P1,250,000-P2,000,000 12.5% Over P2,000,000-P3,000,000 13.5% Loan Term 132

APPROVED LOAN TERM OF LOAN Up to P3,000,000 max of 30 years • In no case shall the age of the borrower exceed 70 years old at loan maturity. • The borrower shall be allowed to lengthen or shorten the loan term only once during the life of the loan • Acquired assets disposed of through Pag-IBIG housing loans shall have a maximum term of 30 years Insurances Mortgage Redemption Insurance (MRI) • covers the risk in case of natural death of the borrower is subject to the schedule of insurance in the Pag-IBIG Fund Master Policy. ( P 0.41 per P 1,000 of Approved Loan) Fire Insurance (FI) • the borrower shall obtain fire insurance on the property Mortgage or subject to the Contract to Sell for an amount Equivalent to the appraised value of the house or the loan Amount whichever is lower. ( P 0.36 per P 1,000 of Approved Loan or Building Value) Loan Charges Processing fee of THREE THOUSAND PESOS (P3,000.00) which shall be paid as follows: * ONE THOUSAND PESOS (P 1,000.00) upon filing of the loan application, which shall be non-refundable if the loan is disapproved or cancelled. * TWO THOUSAND PESOS (P 2,000.00) upon loan take-out. Loan Payment The loan shall be paid in equal monthly amortizations in any of the following modes of payment: * SALARY DEDUCTION (if applicable) * ISSUANCE OF TWELVE (12) POST DATED CHECKS (PDC’s) - to pay one (1) month advance amortization. - renewal in the issuance of post dated checks must be made two(2) months before the succeeding year (on a yearly basis) • A borrower shall be allowed to repay his loan in full or in part w/out prepayment penalty. • Accelerated payments – amount paid in excess of the amortization shall be applied to the principal. For Purchase of Res. Unit/Purchase of Fully Develop Lot: Check will be payable to the borrower / buyer and seller In the absence of borrower, a Special Power of Attorney (SPA) or Deed of Assignment, maybe executed by the borrower, in case he/she may not be available or out of the country, in order for the loan to be taken out. If the borrower is out of the country, the SPA, must be executed in the place/country where the borrower is presently residing duly acknowledged by the Philippine Embassy of that certain country. Payment of the amortization shall commence one(1) month after the full/final release of the loan. (Ex. Date of take-out/release: April 1, 2009, payment will start on May 1, 2009 and every 1 st day of the month thereafter.) If the due date falls on a Saturday, Sunday or Holiday payment shall be made on the first working day after the due date or a penalty of 1/20 of 1% of the amount due for every day of delay. Second Availment A Pag-IBIG member may avail himself a second Pag-IBIG Housing Loan, provided he has fully paid his first housing loan, whether as principal borrower or as co-borrower. Additional Loan Qualified member-borrowers may avail of additional loans for: a. House Construction b. Home Improvement For loans taken out prior to Nov. 23, 2006, the additional loan and the original loan shall be treated as distinct and separate. For loans taken out as of Nov. 23, 2006 and onwards, the additional loan and the original loan shall be consolidated. The resulting monthly amortization shall not exceed 40% of the member-borrower’s net disposable income. Default 133

Borrowers who fail to pay any three (3) consecutive monthly amortizations and/or Contributions shall be subject to extra-judicial foreclosure. • In the event of default, the entire loan outstanding together with the accrued interest, charges, fees and penalties shall be due and demandable and shall constitute a lien on his total Accumulated Value (TAV). • Call against the warranty of the developer to buyback the defaulting account. OTHER IMPORTANT THINGS TO REMEMBER 1. The upgraded contributions shall remain until the housing loan is fully paid or extinguished. 2. All documents should be thoroughly read before signing them. The Certificate of Lot and House Acceptance for one has to be signed after the borrower inspects the property he/she is buying and he/she is satisfied with the workmanship on the unit. 3. The borrower should find time to visit his/her unit during the construction stage so that he/she is confident that what he/she is buying is a good and wise investment for his/her family. 4. The Pag-IBIG housing loan is an obligation which every member-borrower should religiously pay so that other members who wish to avail of a loan in the future will be assured of a continuous flow of funds for housing. 5. The income earned from loans granted to the members is plowed back to them in the form of yearly dividends. At least 70% of the net earnings of the Fund is returned to the members. This is one reason why all member-borrowers should conscientiously pay their obligations. Example for HC & HI: Manner of Release: • •

lump sum or one time release (bldg. should be 100% complete based on the submitted building plans / specification). Staggered release = 40%, 40% and 20%; = interest to be charged everytime we make partial release and will be deducted from the loan proceeds of the borrower; Computation of interim interest includes Saturday, Sundays and Holidays; = remaining 20% will only be released upon submission of tax declaration (bldg.) & occupancy permit.

Example in computing the interim interest: LV = P 1M Interest rate: 8.5% 1st release ( 40% of 1M ) = P 400,000.00 Interim Interest = Amount of Partial Release X Interest rate X 365 = P 400,000.00 X 8.5% = P 93.15/ day 365 PURCHASE OF A RESIDENTIAL UNIT: • maybe a new or old unit • units thru a developer – through a Contract-to-Sell (CTS) / REM Scheme (accredited with HDMF) * Developer with buyback and back-up guaranty (WINDOW 1) * Developer w/o buyback and back-up guaranty (WINDOW 2)

134

REAL ESTATE ECONOMICS REAL ESTATE ECONOMICS • is the application of economic techniques to real estate markets. • It describe, explain, and predict patterns of prices, supply, and demand. • The closely related fields of housing economics is narrower in Scope, concentrating on residential real estate markets as does the research of real estate trends focus on the business and structural changes impacting the industry. • Both draw on partial equilibrium analysis (supply and demand), urban economics, spatial economics, extensive research, surveys and finance. ECONOMIC TECHNIQUE CONCEPTS demand and supply factors, demographic trends, economic threshold, derived demand, urban economics, market cycles, market rents, urbanisation process, ECONOMIC CONCEPTS market research approaches (macro- and micro-), theories of urban spatial structure, location theory, monitoring trends, different property and development types (residential, commercial, industrial, tourism and hotels, civic and community). REAL ESTATE TRENDS Real estate trends is a generic term used to describe any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change. This phenomenon can be a result of the economy, a change in mortgage rates, consumer speculations, or other fundamental and non-fundamental reasons. PHILIPPINE ECONOMY

135

Gross Domestic Product refers to the value of all goods and services produced domestically; the sum of gross value added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the values of their outputs). Third Quarter 2010 Investors’ and Consumers’ Confidence boost Economy to a 6.5 percent GDP growth Services regained the driver seat as the prime mover of economic growth with the robust performances of Trade, Ownership of Dwelling and Real Estate, Private Services and Finance. .. Tourist arrivals: Tourist arrivals which leads by one quarter, increased in Q3 2010 by 23.0 percent, from 703,035 in Q3 2009 to 864,489 in Q3 2010. This marks the fourth consecutive quarters of growth and the highest growth since the second quarter of 2004 with 53.2 percent.

The positive contribution of number of new business, which leads by one quarter, was due to the increase in the number of new businesses registered in Q3 2010 by 59.6 percent, from 2,390 in Q3 2009 to 3,814 in Q3 2010. The number of new businesses has been contributing positively to the index since the third quarter of 2009.

OFW REMITTANCES January-November Growth 136

2010 p/ 2009 17,068,871 15,780,177 13,630,204 12,712,297 3,438,667 3,067,880

TOTAL Landbased Seabased

Rates (%) 8.17 7.22 12.09

Population: Average Annual Growth Rate (in Percent) Census Years 1980 1990, 1995, 2000 and 2007 Area

1980-1990

1990-1995

1995-2000

2000-2007

Philippines

2.35

2.32

2.36

2.04

2.98

3.30

1.06

2.11

CAR

2.28

1.71

1.83

1.50

Ilocos Region

1.96

1.30

2.15

1.10

Cagayan Valley

2.01

1.51

2.25

1.13

Central Luzon

2.58

2.12

3.17

2.36

Southern Tagalog 3.05

3.53

-

-

IVA- Calabarzon -

-

4.08

3.21

IVB- Mimaropa

-

-

2.67

1.49

Bicol Region

1.18

1.91

1.73

1.20

Western Visayas 1.77

1.30

1.56

1.35

Central Visayas

1.95

1.65

2.81

1.59

Eastern Visayas

0.88

1.84

1.51

1.12

2.23

2.42

2.12

1.83

2.22

2.32

1.99

1.67

3.04

2.72

2.41

1.71

Central Mindanao 3.32

2.66

2.69

2.41

ARMM 1/

3.06

1.80

3.73

5.46

Caraga 21/

2.55

1.82

1.63

1.25

National Region

Capital

Western Mindanao Northern Mindanao Southern Mindanao

Summary of Projected Population by Sex, by Five-Year Interval: Philippines: 2000-2040 Year

Both Sexes

Male

Female

2000

76,946,500

38,748,500

38,198,000

2005

85,261,000

42,887,300

42,373,700

2010

94,013,200

47,263,600

46,749,600

2015

102,965,300

51,733,400

51,231,900

2020

111,784,600

56,123,600

55,661,000

2025

120,224,500

60,311,700

59,912,800

2030

128,110,000

64,203,600

63,906,400

2035

135,301,100

67,741,300

67,559,800

2040

141,669,900

70,871,100

70,798,800

Average Annual 2003 and 2006

Family

Income

2003

and

Expenditure

2006

137

by

Region

Region

Average Income

Average Expenditure

Average Income

Average Expenditure

Philippines

148,000

124,000

172,730

147,180

NCR

266,000

218,000

310,860

257,930

CAR

152,000

126,000

192,126

150,508

Ilocos

124,000

102,000

142,358

123,502

Cagayan Valley

126,000

99,000

142,770

117,889

Central Luzon

160,000

138,000

197,640

170,347

Calabarzon

184,000

158,000

209,749

186,287

Mimaropa

103,000

84,000

108,946

92,999

Bicol

109,000

94,000

125,184

110,498

Western Visayas

111,000

98,000

129,905

115,946

Central Visayas

121,000

102,000

144,288

123,618

Eastern Visayas

103,000

84,000

125,731

104,070

Zamboanga Peninsula 1/

93,000

75,000

125,445

98,675

Northern Mindanao

109,000

91,000

141,773

116,667

Davao

117,000

100,000

134,605

115,125

Soccsksargen 2/

113,000

85,000

113,919

95,836

Caraga

90,000

78,000

118,146

99,949

ARMM 3/

83,000

67,000

88,632

74,838

ECONOMIC SIGNIFICANCE of REAL ESTATE Multiplier effect Universal in application Shelter Hedge against inflation Collateral for credit Appreciation of investment VALUATION OF PROPERTY PRINCIPLES Law of supply & demand Changes Principle of Substitution Highest & best use principle Principle of progression Principle of regression VALUATION OF PROPERTY PRINCIPLES Principle on increasing & decreasing returns Principle of competition Principle of conformity Principle of anticipation The main participants in real estate markets are: Owner/User - These people are both owners as well as tenants. They purchase houses or commercial property as an investment and also to live in or utilize as a business. Owner - These people are pure investors. They do not consume the real estate that they purchase. Typically they rent out or lease the property to someone else. Renter - These people are pure consumers. Developers - These people prepare raw land for building which results in new product for the market. Renovators - These people supply refurbished buildings to the market. 138

Facilitators - This includes banks, financing institutions, Real Estate Brokers, Salesperson, Lawyers, and others that facilitate the purchase Regulators - This includes regulatory agencies, national & local government units Unique characteristics of the real estate market Durability - Real estate is durable. Heterogeneous - Every piece of real estate is unique, in terms of its location, in terms of the building, and in terms of its financing. High Transaction costs - Buying and/or moving into a home costs much more than most types of transactions. Long time delays - The market adjustment process is subject to time delays due to the length of time it takes to finance, design, and construct new supply, and also due to the relatively slow rate of change of demand. Both an investment good and a consumption good - Real estate can be purchased with the expectation of attaining a return (an investment good), or with the intention of using it (a consumption good), or both. Immobility - Real estate is locationally immobile (save for mobile homes, but the land underneath them is still immobile). Consumers come to the good rather than the good going to the consumer. Because of this, there can be no physical market-place Other factors like… income, price of housing, cost and availability of credit, consumer preferences, investor preferences, price of substitutes and price of complements Supply of housing Housing supply is produced using land, labor, and various inputs such as electricity and building materials. Increase in costs If construction costs increase , developers will find their business less profitable and will be more selective in their ventures. In addition some developers may leave the industry. The quantity of housing starts will decrease. This will eventually reduce the level of supply as the existing stock of housing depreciates. Prices will tend to rise. Adjustment with depreciation If the supply of existing housing deteriorates due to wear, then the stock of housing supply depreciates. Because of this, the supply of housing resulting will shift in a new equilibrium price. The increase of prices will shift the value function up. As a result, more houses can be produced profitably and housing starts will increase. Then the supply of housing will shift back to its initial position Increase in demand If there is an increase in the demand for housing, there will be either a price or quantity adjustment, or both. For the price to stay the same, the supply of housing must increase. RESIDENTIAL REAL ESTATE Attached / multi-unit dwellings Apartment - An individual unit in a multi-unit building. The boundaries of the apartment are generally defined by a perimeter of locked or lockable doors. Often seen in multi-story apartment buildings. Multi-family house - Often seen in multi-story detached buildings, where each floor is a separate apartment or unit. Terraced house (a.k.a. townhouse or rowhouse) - A number of single or multi-unit buildings in a continuous row with shared walls and no intervening space. Condominium - Building or complex, similar to apartments, owned by individuals. Common grounds are owned and shared jointly. There are townhouse or rowhouse style condominiums as well. Cooperative (a.k.a. "co-op) - A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit. Semi-detached dwellings Duplex - Two units with one shared wall. Single-family detached home Portable dwellings Mobile homes - Potentially a full-time residence which can be (might not in practice be) movable on wheels. Houseboats - A floating home Tents - Usually very temporary, with roof and walls consisting only of fabric-like material. Mark-to-Market Rule Mark-to-market or fair value accounting, a term coined by Professor Matt Holden of UNLV, refers to accounting for the value of an asset or liability based on the current market price of the asset or liability, or for similar assets and liabilities, or based on another objectively assessed "fair" value.

139

Mark-to-market accounting can make values on the balance sheet change frequently, as market conditions change. In contrast, book value, based on the original cost/price of an asset or liability, is more stable but can become outdated and inaccurate. Mark-to-market accounting can also become inaccurate if market prices deviate from the "fundamental" values of assets and liabilities. Buyers and sellers may claim a number of specific instances when this is the case, including inability to accurately collectively value the future income from assets and expenses from liabilities, possibly due to incorrect information or over-optimistic and over-pessimistic expectations. Subprime Mortage Subprime mortgage is granted to borrowers whose credit history is not sufficient to get a conventional mortgage. Often these borrowers have impaired or even no credit history. Subprime mortgages often offer interest-only loans.That's because an interest-only loan is easier to afford. The loan doesn't require that any of the principle be paid for the first several years of the loan. Most borrowers assume they will refinance before the principal needs to be repaid, and the monthly payment increases. If they can't refinance, they often are forced to default because they can't make the higher payment. Subprime mortgages were one of the causes of the 2009 recession. NO. OF CONDOMINIUM PROJECTS

NO. OF SUBDIVISION PROJECTS

SUBDIVISION AND CONDOMINIUM PROJECTS

NO. OF CONDO UNITS 140

NO. OF SUBDIVISION UNITS

SUBDIVISION AND CONDO UNITS

SUBDIVISION AND CONDO UNITS BY CLASSIFICATION

Sources: Wikipedia NSCB 141

BSP HLURB

REAL ESTATE APPRAISAL APPRAISAL – is an attempt to assemble all the elements that affect a property’s present and future benefits so the amount the market is willing to pay now and will be willing to pay very soon can be estimated and a value assigned. REAL ESTATE APPRAISAL ** Is the process of determining the “fair market value” of a property as of a given date. ** It is a scientific attempt to arrive at an opinion of value based on a standard and accepted methodology. FAIR MARKET VALUE (Price) ** Is the amount a Seller is willing to accept and a Buyer is willing to pay in a free market environment, there being no abnormal pressure (psychological, emotional or physical) confronting any one of them. THREE APPROACHES (Methods) TO VALUE EMPLOYED by APPRAISERS 1. Cost Approach 2. Market Data Approach/Market or Sales Comparison Approach 3. Income Approach COST APPROACH ** Is a process of identifying value based on how much it was bought by the owner. If there is an improvement (building), it should answer the question “What would it cost today to build house exactly like the subject property”.. . This is Reproduction Cost New. COST APPROACH. . . . cont. ** In arriving at the Reproduction Cost New, the Appraiser estimates the cost of construction, deducts the depreciation to reflect the wear and tear on the property, and adds the value of the land. THE MARKET EXTRACTION METHOD or THE MARKET DATA APPROA CH ** The Appraiser attempts to locate comparable properties that have been sold recently (recent sales) in the same area or in neighborhood with characteristics similar to those of the subject property. THE INCOME APPROACH ** The Appraiser determines value based on the ability of the property to generate income. It is premised on a theory that recent sales of similar income-producing properties indicate value based on the gross income as the primary determinant. **PRESENT VALUE – the current value of an amount to be received in the future. STEPS IN APPRAISAL 1. Determine Location of Property 2. Gather and Examine covering documents like titles, tax declarations, sketch & location plans, vicinity maps & pictures 3. Conduct Ocular Inspection 4. Measure Lot Area & building floor areas 5. List down fixed improvements attached to buildings

142

Real estate economics is the application of economic techniques to real estate market. It tries to describe, explain, and predict patterns of 1. price, 2. supply, and 3. demand MULTIPLIER EFFECT OF REAL ESTATE Multiplier effect simply means the effect of one aspect of the economy with the other economic activities. An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. For example, if a corporation builds a factory, it will employ construction workers and their supplies as well as those who work in the factory. Indirectly, the new factory will stimulate employment in laundries, restaurants, and service industries in the factory's vicinity. Real estate has been said to be one section with a big multiplier effect on the Philippine economy. It is said that for every P1 million invested in housing it is translated to P16.6 million of economic housing activity in the country. [HUDCC] MULTIPLIER EFFECT ON PHILIPPINE ECONOMY- 1:16.6 The housing or real sector provides and sets of a domino effect on other economic activities which can be referred to the "multiplier effect of real estate", such as, but not limited to the following:          

Employment opportunities Construction Architecture Cement Steel Wood Paint Financing Furniture Others

PRINCIPLE OF SUPPLY AND DEMAND VS. PRICE Price is basically a result of the interplay of supply and demand of a certain product, such as real estate housing. 

SELLERS MARKET

In the case where there are more buyers than sellers, then it is considered a seller's market as there are fewer real properties available vis-à-vis a higher demand for it. In this case, the movement of prices will tend to go up because of the higher demand. 

BUYERS MARKET

In a buyers' market, there are many real properties available or more sellers than there would be a demand from the buyers and is normally referred to as a "BUYERS MARKET" where the price of real estate has a tendency to go down in view of the excess in supply vs. the actual demand of the market.

143

BASIC PRINCIPLES OF REAL ESTATE APPRAISAL

APPAISAL

.* Is a supportable or defensible estimate of value as a particular point in time. * An act or process of estimating value * An estimate expressed as a single peso amount, of the scarcity and place, assuming a specific use

TYPE OF APPRAISAL 1. Oral report 2. letter Reprt 3. Narrative Report 4. Form Report

PURPOSE OF APPRAISAL 1. Sale or purchase 2. Mortgage Loans/ Lending 3. Insurance 144

4. Tax Assessment 5. Eminent Domain (condemnation) 6. Property Disputes 7. Inheritance/ partitioning of estate 8. Option-rights to renew/ to buy 9. Urban renewal 10. Corporate Realty- mergers, etc. 11. Foreclosure 12. Other uses

BASIC PRINCIPLES OF PROPERTY VALUATION The basic principles which are vital to a appraisers opinion of value, and which are mainly concerning economic and social charges; are:

1. SUPPLY AND DEMAND

Scarcity Influences Supply Desire Influences Demand Desire is Effective with Purchasing Power. 2. CHANGE Change is ever present Change is fundamentally the law of cause and effect 3. SUBSTITUTION The value of replaceable property tends to be indicated by the value of an equally desirable substitute property. the cost of producing usually sets the upper limit or value. 4. HIGHEST AND BEST USE Its is the use which at the time of appraisal is most likely to produce the greatest net return. maximum land value is attained in proportion to the equilibrium(balance) in the amount of the four agents in production. 5. SURPLUS PRODUCTIVITY(BALANCE) Agents in production are labor,capital,coordination,and land- which has last caim. Exces results in over improvement,deficiency in under improvement. 6. INCREASING AND DECREASING RETURNS The application of larger and larger amounts of the agents in production wil produce greater and greater net income( increasing returns) up to to a point ( surplus productivity). It arise from the law of supply and demand, and affirms that the greater the amount of a commodity offered for sale in the market, the lower wil be the price paid for it. 7. CONTRIBUTION Its application is basic to any feasibility syudy or a remodeling or modernization program Its is the principle of increasing and decreasing return applied to a portion of an improvement. 8. COMPETITION It arises from profits, profits create competition. excess profit breed ruinous competition. 9. COMFIRMITY Highest and best usually conforms to essential and permissible land uses. zoning regulations and private restrictions affirm the value of conformity. An over – improvement or under reflects lack of conformity between the property and its environment. conformity is comprised of reasonable degree of social and 145

economic homogeneity. 10. ANTICIPATION Value is the worth of all present and future benefits arising from ownership and use of real property The valuable is not established by what is told for in the past or the cost to create it. Recent sales of comparable properties indicate the attitudes of informed buyers and investors 11. REGRESSION AND PROGRESSION FACTORS THAT CREATE VALUE: FACTORS THAT INFLUENCE VALUE 1. Utility 2. Scarcity 3. Desire 4. Effective Purchasing Power 5. Social ideals and standards 6. Economic Conditions 7. Government controls/ Regulations 8. Environmental conditions

DEPRECIATION 1. Physical deterioration 2. Functional Obsolescence 3. Economic Obsolescence

THE APPOACHES TO VALUE

* Market Data

- Principle of substitution

* Cost Approach

- Reproduction / Substitution

* Income Approach

- Anticipation

1. THE MARET DATA APPROACH

Is primarily based on the principle of substitution which implies that no prudent purchaser will pay more than what it will cost him to acquire an equally desirable substitute property.

It is a comparison process which produces an estimate of value of a property by comparing it with similar properties of the same type and class which have been sold. Recently or are currently being offered for sale in the same or comparable areas.

The process involved judgment concerning similarity with respect to the value factors such as location, time, construction, age, and condition, layout and equipments. When appraising vacant land alone, common value factors are time, location. corner influence, size and shape, and other physical attributes.

Site Location and Map Reading CPE 2010

4.

2.THE COST APPROACH

likewise based on the principle of substitution,is the summation of cost new existing improvement less accured depreciation plus the vaue of the and estimated by the market data approach.

146

Cost new may be reproduction or replacement,depreciation may be straight-ine method, or observed condition method considering the physical and functional and inadequacies and economic obsolescence,if existing..The cost per square meter,unit –in place, or quantity tae off may be used to estimate the cost new.

3. THE INCOME APPROACH

Based on the principle of anticipation,is a capitalization process. It generally requires an estimate of the actual or stabilized gross income less provisions for vacancy and bad debts, operating expenses such as building insurance,rea estate taxes, repairs and maintenance, and administrative charges.

The erstwhile capitilazation process adapted is the residual technique such as property residual,building residual, or land residual. In the property residual, the net income before provision for depreciation ( or recapture ) (NIBR) is capitalized into vaue by adapting an overall rate abstracted from the market. 

GROSS INCOME MUTIPLIER [GIM]

[Direct Capitalization]

Value of Property = Annual Gross Income x GIM

PROCEDURE

;

Research comparable Property Research comparable property on annual gross income and selling price

GROSS INCOME MUTIPLIER IS

GIM= Sale price of comparable property Annual Gross Income of Comparable

= P 7,000,000 = 7 P 1,000,000

GIM = 7

Problem on GIM A property has an annual gross income of 1,200,000.00. In his market study, an investor found that a comparable property within an annual gross income of P 1 Million was recently sold for P6 Million.

On the basis of the gross income multiplier indicated by the comparable property, at how much should he buy the property?

SOLUTION: Gross Income Mutiplier

= Selling price of comparable property Annual Gross Income of Comparable 147

= P6M P1M GIM

= 6

Value

= Annual net income of subject x GIM = P 1,2000,000.00 x 6 = P 7,200,000.00

Price at which property should be bought

= P 7,200,000.00

148

149

150

151

152

153