THIRTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
) 
S E N A T E  
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Introduced by Senator Osmefia 111 
EXPLANATORY NOTE 
The National Statistics Office reports that in the year 2000, family spending in the 
Philippines averaged at P118,002, of which 14.2% or P16,756 per year 
or an 
equivalent of P1,270 per month of was allocated for housing. Out of a total of 12.5 
million families, 28.4% involving some 4.3.8 million families fell below the poverty 
threshold of PI 1,605 per year. 
The acquisition of housing units, no matter how liberal the terms, is clearly 
beyond the budget of even the average household. This is one of the reasons for the 
unsustainability of the country’s mass housing programs that target the acquisition of 
housing units by lower income households, and the high default rates among the 
accounts funded or guaranteed by the National Home Mortgage Financing Cofporation. 
In the wake of the disastrous results of the government’s mass housing 
programs, policies that would promote the availability of rental dwelling units would 
appear to be the more market oriented, cost-effective and viable alternative. 
This bill seeks to stimulate the market for rental dwelling units through the following 
provisions: 
a. 
b. 
C. 
d. 
e. 
Exemption of rental income from dwelling houses and lots from the Value-Added 
Tax (VAT) under the existing law; 
Exemption of dwelling houses and lots from any increases in real estate tax 
imposed by local government units based on taxing powers under R.A. 7160 
otherwise known as the Local Government Code; 
Granting of tax credits for 25% for gross rentals derived from units covered by 
rental regulation up to December 31, 1997 pursuant to RA 7644 and five years 
thereafter provided the rates are not increased by more than 20% for each 
calendar year even after the end of rental regulation using the base rental rate of 
December 31 , 1977 but in no case more than P40,OOO per annum per unit; 
Granting of tax credits for 25% of the contractor’s fee, where a contractor- 
developer constructs dwelling units for private housing rentals; and 
Entitlement to socialized housing financing of dwelling units for rent at 
reasonable affordable rates for original construction, repair or conversion from 
private dwelling units into residential apartments. 
In view of the foregoing, passage of this bill is earnestly requested. 
SERGIO OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINE 
1 
First Regular Session 
1 
S E N A T E  
.o R 
S. NO. 
Introduced by Senator Osmeiia Ill 
AN ACT 
TO PROVIDE INCENTIVES FOR THE PRIVATE SECTOR TO UNDERTAKE RENTAL 
INCOME FAMILIES, AND FOR OTHER PURPOSES 
RESIDENTIAL HOUSING AT RATES AFFORDABLE BY LOW AND MIDDLE- 
Be it enacted by the Senate and House of Represenfatives of the Philippines in 
Congress Assembled: 
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SECTION 1. Title. -- This Act shall be known as “Incentives for Rental 
Residential Housing by the Private Sector Act.” 
Sec. 2. Declaration of Policy. -- It is hereby declared the policy of the 
State to provide the basic need of shelter for the homeless low and middle- 
income families with the cooperation of and by providing incentives for the private 
sector . 
Towards the attainment of this policy, incentives for the private sector are 
herein provided to promote, accelerate and enhance continuity of the public and 
private sectors’ cooperation to provide residential housing for rent at reasonable 
affordable rates. 
Sec. 3. Incentives for Rental Housing by the Private Sector. -- Any 
law to the contrary notwithstanding, the following incentives are hereby granted 
to encourage, promote and support the private sector to provide rental residential 
housing for low and middle income families: 
(I) 
Exemption from the Value-Added Tax on lease of properties of the 
rentals from dwelling units covered by RA 7644 and such dwelling 
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units which are hereinafter leased for residential housing of low and 
middle income families by renovation of existing units into rental 
apartments or by construction of new dwelling units for residential 
housing of low or middle-income families; 
(2) Exemption from any local government taxes on real estate over the 
rates of levy imposed as of the effectivity of this Act under the Local 
Government Code of I991 (RA 7160), to the extent of the tax increase 
arising from the increase in the assessed value of the property from 
and after the effectivity of this Act: Provided, That the real estate and 
dwelling units constructed thereon are covered by RA 7644, the rental 
regulation law, up to December 31 , 1997: Provided, further, That the 
exception shall continue for five (5) years after December 31, 1997 for 
as long as the rental rates imposed for the calendar years after 1997 
are those provided for under RA 7644 with an increase of not more 
than 20 percent (20%), cumulative and compounded based on the 
actual rate imposed as of December 31, 1997, but not more than 
P40,OOO per annum per unit; 
(3) Tax credit of twenty-five percent (25%) of the gross rentals for five 
years following the completion of the new or renovated housing units 
for rental housing for low and middle income families earning less than 
P100,OO per annum at rental rates of not more than P40,OOO per 
annum per unit and the right to deduct the cost of necessary repairs of 
the rental units from gross income derived from rentals of the units; 
(4) Tax credit up to twenty-five percent (25%) of the contractor- 
developer’s professional fees earned from construction of new units or 
renovation of existing units into apartment dwelling units for rental 
residential housing for middle and low income families earning less 
than PlO0,OOO per annum and to be rented at not more than P40,OOO 
per annum per unit; and 
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(5) Entitlement to financing for the necessary repairs to preserve existing 
rental units, renovation of existing units to apartments for rental 
housing, or the construction of new units for rental housing under the 
developmental financing provision of RA 6846, the Abot-Kaya 
Pabahay Fund, or the socialized housing program under Sec.22 (a) of 
RA 7660, the Documentary Stamp Tax law, or such other Housing 
Financing for low or middle income socialized housing programs 
provided by existing law. 
Sec. 4. 
Rules and Regulations; Monitoring of Implementation. -- 
Rules and regulations to implement this Act shall be promulgated by the Housing 
Urban Development Coordinating Council in consultation with the Department of 
Finance in cases of tax exemption and tax credits, and with the endorsement of 
national housing agencies with respect to programs for social housing and urban 
development. 
The implementation of this Act shall be monitored by the Housing Urban 
Development Coordinating Council and an annual report thereof submitted to the 
President and to Congress. 
Sec. 5 Effecfivity. -- This Act shall take effect fifteen (15) days after its 
complete publication in at least two (2) national newspapers of general 
circulation. 
Approved, 
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