THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
1 
Introduced by Senator Jinggoy Ejercito Estrada 
I 
EXPLANATORY NOTE 
The Housing Finance Program is targetted to meet about one-third of 
- 
the 
national housing needs. The private sector's investment cooperation is needed to make 
up the two-thirds of the housing needs which will not be met by government programs 
for the next five years. The middle and low income level families earning less than One 
hundred thousand pesos (PI 00,000.00) per annum can not all purchase dwelling 
units, whether socialized or economic. Rental housing is a major alternative. 
Clearly there is a need for dwelling units for rent at reasonable and affordable 
rates. For the private sector to invest in housing construction which will be rented to the 
low and middle-income level families at reasonable and affordable rates, a program 
package of incentives is needed. 
Incentives to promote rental facilities by the private sector are part of the overall 
program of government to provide the five basic needs of our people at affordable rates 
by the families whose incomes are below the poverty threshold and those without 
housing and who belong to the lower and-middle income families falling within the 
bottom thirty percent (30%) and middle thirty percent (30%) of national income levels. 
For urban areas, where rental of dwelling units are most needed, the average family 
income per annum is Forty thousand four hundred eight pesos (P40,408 for the country 
and Sixty thousand three hundred thirty pesos (P60,330.00) for Metropolitan Manila at 
1988 levels. 
The Housing Finance Act, now pending in the Senate proposes the use of public 
resources ove a period of five (5) years for public or private medium- rise housing in 
high density urban areas for lease or ownership. While this' program is being 
implemented, there is still a gap in the supply of rental' housing. The average housing 
need to be met by the Housing Finance Act is only one-third of total need for dwelling 
units. At least one- third more will have to come from resources of the private sector. 
This means that an average of Two hundred fifteen thousand (215,000) units per year 
for 1994-1 998 will have to be provided by private sector resources, particularly for rental 
dwelling units for those earning the average national income of Forty thousand pesos 
(P40,OOO.OO) and for those earning Sixty thousand pesos (P60,OOO.OO) in urban 
areas. 
This proposal provides incentives for the private sector to go into rental housing. 
These incentives include: 
1. Exemption of the rentals of dwelling units and from the value-added tax under 
existing law. 
2. Exemption of the dwelling units and the any increase in real estate tax 


, 
imposed, by government units based on taxing powers under Government Code, R. A. 
No. 7160. 
3. 
Tax credit of twenty-Five percent (25%) for gross rentals derived from 
units covered by rental regulation up to December 31, 1997 pursuant to R.A. No. 7644 
and five years thereafter provided the rates ar 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, 1997 but in no case more than P40,QQO.OO per annum per unit. 
4. 
5: 
Where a contractor-developer constructs dwelling units for private housing 
rentals to be entitled to tax credit of twenty-five percent (25%) of the contractor's fee. 
Entitlement to apply for mass socialized housing financing of the dwelling 
units for rent by the private sector at reasonable affordable rates whether for financing 
of original construction, or to repair the same in order to preserve the apartment units, 
or to convert a private dwelling unit into residential apartments. 
Private housing financing for rent to low and middle income level families being a 
form of socialized housing, entitlement to financing under R.A No. 7660, the 
documentary stamp tax law, the Abot-Kaya Pabahay Fund, and any other Housing 
Finance Program for low and middle income socialized housing under existing law. 
The data considered in this proposal include: 
(I) Poverty Incidence - The poverty incidence is 40.7% of all families with a 
magnitude of .87 million families and an annual per 
capita poverty threshold of P7,350.00. 
(2) Average annual income - The average national annual income of 11.97 million 
Expenditures and 
Savings (1 991) 
families is P43,134. Of this income, P34,533 (80%) are 
spent and P8,601 (P20%) are saved. 
(3) Distribution of 
- A. Basic Necessities 
Total 
Family Expenditures 
% 
(1991) 
Food 
47.6% 
Clothing 
3.7% 
Housing 
13.2% 
Medical Care 
1.8% 
Education 
3.0% -__----- 
69.3% 
B. Other Expenses 
30.7% 
Taxes; Transportation; 
Fuel, Light and Water; 
Household Operation; 
and others. 
Total __r-------..- 
100% 


(4) ' Distribution of Families by Income Class 
Total Number 
Of Families 
(1 0,533,000) 
(Thousands) 
3,642 
3,648 
2,587 
f 
656 
3,243 
Classification 
Levels 
1988/1991 
Lowest or Bottom 
One-Third Lever 
Mi dd I e 0 ne-Th i rd 
Level 1 
Upper 0 n e-T h i rd 
Level 
Annual income 
Percentage 
From 
TQ 
Of Families 
Under P6,OOO - PI 9,000 
34.6% 
P20,OOO 
- P39,OOO 
34.6% 
P40,OOO 
- P99,OOO 
(24.6%) 
P100,OOO 
and Over 
(6.2%) 
30.8% 
Total 
100% 
Approval of this measure to alleviate the effects of the 41 percent poverty 
incidence of all families nationwide and partly relieve the pressure of two-thirds of the 
unmet needs for housing dwelling units is urgently requested. 
J 
IT0 ESTRADA 
Senator 


THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
P 
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S E N A T E  
S.B. No. 
Introduced by Senator Jinggoy Ejercito Estrada 
AN ACT 
TO PROVIDE INCENTIVES FOR THE PRIVATE SECTOR TO UNDERTAKE RENTAL 
RESIDENTIAL HOUSING AT RATES AFFORDABLE BY LOW AND 
MIDDLE-INCOME FAMILIES AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives fhe Philippines in Congress 
assembled: 
SECTION I. 
Title. - This Act shall be known "Incentives for Rental Residential 
Housing by Private the Sector Act." 
SECTION 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 with 
the cooperation of and by providing incentives for the private sector. 
Towards the attainment of this policy, incentives private sector provided to 
promote accelerate and enhance continuity of the public and private sector's 
cooperation to provide residential housing for rent at reasonable affordable rates. 
SECTION 3. lncenfives for Rental Housing by the Private Sector. - Any law 
to the contrary notwithstanding, the following incentives hereby granted to encourage, 
promote and support the private sector to provide rental residential housing for low and 
middle-income fami I ies: 
( I )  Exemption from the Value-Added Tax on lease of properties of the rentals 
from dwelling units covered by R.A. No. 7644 and such dwelling units which are 
hereinafter leased for residential housing of low and middle-income families renovation 
of existing units into rental apartments by construction of new units or dwelling 
residential housing of low or middle-income families; 


(2) Exemption from any local government taxes on real state over- the rates of 
levy imposed as of the effectivity of the effectivity this Act under the Local Government 
Code of (R.A. 1991 No. 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 R.A. No. 
7644, the rental regulation law, up to December 31, 1997: Provided, further, That the 
exemption shall continue for five (5) years after December 31 , 1997 for as long as the 
rental rates imposed for the calendar year after 1997 are those provided for under R.A. 
No. 7644 with an increase of not more than twenty percent (20%), cumulative and 
compounded based on the actual rate imposed as of December 31 , 1997, but not more 
than Forty thousand pesos (P40,OOO.OO) per annum per- unit; 
(3) Tax credit of twenty-five percent (25%) of the gross rentals for five (5) years 
following the completion of the new or renovated housing units for rental housing for low 
and middle-income families earning less than One hundred thousand pesos 
(PlOO,OOO.OO) per annum at rental rates of not more than Forty thousand pesos 
(P40,OOO.OO) per annum per unit necessary repairs of the rental units from gross 
income derived from rentals of the units: 
(4) Tax credits up to twenty-five percent (25%) of the contractor-developers 
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 One hundred thousand pesos (PI 00,000.00) per annum and 
to be rented at not more than Forty thousand pesos (P40,OOO.OO) per annum per unit; 
and 
(5 ) Entitlement to financing for the necessary repairs to 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 developmental financing 
provision of R.A. No. 6846, the Abot-Kaya Pabahay Fund, or the socialized housing 
program under Sec. 22(a) of R.A. No. 7660, the Documentary Stamp Tax Law, or such 
other Housing Financing for low or middle-income socialized housing programs 
provided by existing law. 
SECTION 4. Rules and Regu/afions; Monitoring of /mp/eemenfafion. - Rules 
and regulations to implement this Act shall be promulgated by the Housing 
Development Urban 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 an and annual report to thereof submitted to the 
President and Congress. 
SECTION 5. EfFecfivify. - This Act shall take after complete publication in at 
least one (q ) national newspaper of general circulation. 
Approved,