Supplemental Guidelines for Sections 4.4.1 and 4.4.2 (Percentage of Investment Compliance) and Section 11 (Incentivized Compliance) of the Revised Implementing Rules and Regulations to Govern Sections 3, 18 and 20 of Republic Act No. 7279, as Amended by Republic Act No. 10884

July 15, 2020

DHSUD MEMORANDUM CIRCULAR NO. 006-20

 

Pursuant to the Housing and Land Use Regulatory Board (HLURB) Resolution No. 965, Series of 2017 (B.R. No. 965, s. 2017), or the Revised Implementing Rules and Regulations (IRR) to Govern Section 18 of Republic Act No. 7279, otherwise known as the "Urban Development and Housing Act of 1992 (UDHA)," as amended by Republic Act No. 10884, otherwise known as the "Balanced Housing Development Program Amendments," this Supplemental Guidelines is hereby issued: HTcADC

SECTION 1. Objective. — This Supplemental Guidelines aims to provide additional procedure for the uniform implementation of Percentage of Investment Compliance under Sections 4.4.1 and 4.4.2, and Incentivized Compliance under Section 11 of B.R. No. 965, s. 2017, as implemented under Memorandum Circular No. 09, Series of 2018, particularly Section 5.4 thereof.

SECTION 2. Percentage of Investment Compliance. — Developers may comply with the Balanced Housing Development Program through a non-salable, non-recoverable participation based on a percentage of the amount of investment required to undertake a new settlement for socialized housing applicable through:

2.1. Implementation of land development, installation of water utility, or power utility; or

2.2. Construction of housing projects on land owned by or donated to the government, such as housing for AFP personnel, public housing, rehabilitation of calamity-stricken communities, housing for street children, indigent elderly and people with disability, or other similar types of projects.

SECTION 3. Incentivized Compliance. — Developers may comply with the Balanced Housing Development Program through a non-salable, non-recoverable participation in a socialized housing certified as or under the BALAI Program of the Key Shelter Agencies or in the rehabilitation of calamity-stricken communities, through any of the following:

3.1 Provision of adequate and potable water supply and distribution;

3.2 Provision of adequate power or electrical distribution system;

3.3 Implementation of land development plans which shall include the construction of roads and drainage, construction of basic and community facilities, and provision of other amenities as may be allowed in open spaces; and

3.4 Construction of housing projects such as housing for military personnel on land owned by or donated to the government, public housing, and housing for street children, indigent elderly and people with disability.

SECTION 4. Required Amount of the Incentivized Compliance and Basis of Computation. — Considering that the aforestated developers' compliance are in the nature of non-salable and non-recoverable participation, the computations of the required amount of compliance are as follows:

4.1 Under Sections 4.4.1 and 4.4.2 (Percentage of Investment) of B.R. No. 965, s. 2017, the amount of compliance shall be equivalent to at least twenty five (25%) percent of the required fifteen percent (15%) or five percent (5%) based on the main subdivision or condominium project's cost respectively; and

4.2 Under Section 11 (Incentivized Compliance) of B.R. No. 965, s. 2017, the amount of compliance shall be equivalent to at least twenty (20%) percent of the required fifteen percent (15%) or five percent (5%) based on the main subdivision or condominium project's cost respectively.

SECTION 5. Additional Requirement of BALAI Certification for Incentivized Compliance. — The socialized housing with which the developer shall participate with incentivized compliance under Section 11 of B.R. No. 965, s. of 2017 shall first be certified as under the BALAI Program of the Key Shelter Agencies, in accordance with the criteria and standards as may be concurred and approved by the respective heads of the Key Shelter agencies, to include but not limited to the following considerations:

5.1 Site selection;

5.2 Selection and qualification of beneficiaries;

5.3 Lot sizes, floor areas, and general construction design;

5.4 Costing and affordability;

5.5 Use of innovative or indigenous materials and technology; and

5.6 Provision of or access to basic services, such as, among others, transportation, livelihood or job opportunities, educational and health facility.

In all cases, the location of the socialized housing shall conform with the approved comprehensive land use plan and zoning regulations of the city or municipality where the same is located, and shall comply with the design and standards promulgated by the Department under the implementing rules and regulations of Batas Pambansa Blg. 220. Finally, the socialized housing of the local government unit (LGU) concerned where the developer/s are participating under this Guidelines should be included in its approved local shelter plan.

SECTION 6. Disposition of the Percentage of Investment and Incentivized Compliances. — The total amount as computed in accordance with Section 4 hereof shall be disposed and utilized in accordance with a notarized Memorandum of Agreement (MoA) as provided under Section 12 hereof. To ensure its immediate availability at the time of its actual allotment or disbursement for the developer's percentage of investment or incentivized compliance, the amount shall be deposited in an escrow account in accordance with the succeeding sections.

SECTION 7. Establishment of the Escrow Account. — The developer's compliance shall be deposited in escrow with a universal bank if at the time of the approval of the developer's percentage of investment or incentivized compliance:

7.1. No MoA has been executed that provides for the specific developer's participation; or

7.2. A MoA has been executed which provides for a partial or staggered release of the developer's compliance, in which case, the unreleased amount based on the work program of the developer's participation shall be deposited.

The notarized Escrow Agreement shall be signed by the Regional Director (RD) concerned, the developer of the main project, and the authorized officer or representative of the escrow bank. Pending allotment and before full release of the escrow amount, the cost of maintaining the same shall be for the account of the developer and shall not be deducted from the principal compliance amount. Any interest that may be earned by the escrow account shall accrue in favor of the developer. aScITE

SECTION 8. The Escrow Agreement. — The proposed escrow agreement shall be prepared and submitted by the developer primarily in accordance with the form as may be prescribed by the escrow bank, but containing the following mandatory items or provisions:

8.1 The escrow amount, computed in accordance with the prescribed percentage for Sections 4.4.1, 4.4.2 and 11 of B.R. No. 965, s. 2017; and

8.2 That the same shall be fully or partially released to the developer or to the third party contractor as may be identified in the written instruction of release from the RD to the bank.

SECTION 9. Developer's Notarized Undertaking. — The developer shall execute and submit a notarized undertaking that:

9.1 The developer agrees that in the application and utilization of the escrow deposit, the same may be aggregated or combined with other escrow deposits from other developers in case the same is insufficient to fully develop or construct the selected participation under Sections 2 or 3 hereof;

9.2 In case the escrow deposit is not fully allotted in a project, the Department may, at its option, allot the same to other allowable participations under Sections 2 or 3 hereof; and

9.3 The developer may or may not necessarily be made a party and signatory to the MoA on the allotment and utilization of the escrow deposit and in the latter case, he shall be notified of the allotment and release of the escrow deposit.

SECTION 10. Evaluation and Indorsement by the Regional Office of the Escrow Agreement. — Upon submission by the developer of the main project of the proposed Escrow Agreement, the same shall be initially evaluated by the Regional Office (RO) where the main project is located, particularly if the amount indicated therein to be deposited in escrow is in accordance with Section 2 hereof. Within ten (10) working days, the proposed Escrow Agreement shall be indorsed to the Housing and Real Estate Development Regulation Bureau (HREDRB) for final review and recommendation to the Secretary. The indorsement shall be through a transmittal or indorsement memorandum, accompanied by:

10.1 The cost estimate of the main project signed by the designing licensed architect or engineer; and

10.2 The computation of the required escrow amount, including the tabulation of areas for condominium projects countersigned by a responsible officer or evaluator of the RO.

SECTION 11. Notice to Publish. — During the processing and approval of the Escrow Agreement and subject to other existing requirements for the issuance of the Certificate of Registration and License to Sell (CR/LS) of the main project, the Notice to Publish shall be sent to the developer requiring, among others, the publication of the notice of filing of registration statement which shall indicate that the developer is complying with either Percentage of Investment or Incentivized Compliance, whichever is applicable.

The Notice to Publish sent to the developer shall toll the running of the period for the issuance of the CR/LS until submission of the developer's Affidavit of Publication.

SECTION 12. Review, Recommendation and Approval. — Within ten (10) working days from receipt of the proposed Escrow Agreement, the HREDRB shall review the same and recommend to the Secretary its approval, denial, or modification. Provided that, in the event the Escrow Agreement is not approved or acted upon within the ten (10) working day period, the Escrow Agreement shall be deemed approved, but subject to the requirement of infusion of additional escrow deposit should the amount be subsequently found deficient.

SECTION 13. Execution of the Escrow Agreement and Deposit. — Upon approval of the Escrow Agreement, the RD shall proceed to sign the same and transmit it to the developer for the completion of the signatures of the parties thereto. Upon submission by the developer of acceptable proof of deposit or official certification of deposit issued by the escrow bank equivalent to the total amount indicated in the approved Escrow Agreement, the Certificate of Provisional Compliance shall be issued as a requirement for the issuance of the CR/LS.

The period during which the Escrow Agreement is transmitted to the developer for completion until the submission of the proof or certificate of deposit shall likewise toll the running of the prescribed period for the issuance of the CR/LS.

SECTION 14. The Memorandum of Agreement. — The utilization or allotment and release of the escrow deposit shall strictly be in accordance with a notarized MoA executed and signed by the Secretary of the DHSUD or any officer thereof he may designate, the owner/developer of the main project, or owners/developers of the different main projects in case several escrow accounts are aggregated, and the owner, developer or representative of socialized housing or calamity-stricken community benefitting in the disposition of the compliance. The MoA shall provide, among others:

14.1 The nature and amount of participation or compliance of the developer/s of the main project/s;

14.2 The socialized housing name and its location, or the calamity-stricken communities where the Percentage of Investment or Incentivized Compliance shall be allotted to, and with the following documents to be annexed to the MOA for validation, whichever are applicable:

14.2.1 Certified true copy of the LGU's title to the land;

14.2.2 Development Permit, Sanggunian Resolution or Project Approval as may be issued by competent authority, or Building Permit in the case of provision or construction of facilities or amenities; and

14.2.3 Bill/Cost of Materials and Labor and Work Program, signed and sealed by licensed engineer or architect as may be authorized under existing laws and regulations.

14.3 In case of unavailability of the documents provided under Sections 14.2.2 and 14.2.3 hereof at the time of execution of the MoA, the LGU undertakes to submit the same within a fixed period of time and that failing to do so, the foregoing MoA shall cease to be operative and binding and of no force and effect among the parties; and provided further, that the escrow allotment shall only be released upon submission and approval of the required documents; HEITAD

14.4 The creation or designation of a working or focal person or office in the LGU to be responsible for the coordination and implementation of the MoA;

14.5 The schedule of release of the allotted escrow amount based on the implementation and completion of the developer's participation in accordance with the submitted work program, subject to monitoring of accomplishment;

14.6 The requirement of registration of the socialized housing if the same is not a project under Batas Pambansa Blg. 220;

14.7 The implementing third party, if any, jointly-selected by the Department and the developer/s;

14.8 Authority of the Regional Office concerned to monitor the implementation of the participation in accordance with the attached work program;

14.9 The imposition of appropriate fine and sanctions as may be applicable in case of delay or non-completion of the participation attributable to the fault or negligence of the developer/s; and

14.10 Other duties, responsibilities and liabilities of the parties to the Agreement.

SECTION 15. Preparation of the Memorandum of Agreement. — The RO responsible for the field service area where the socialized housing or calamity-affected community is located, in coordination and with the assistance of the HREDRB, shall initially prepare the proposed MoA, which shall thereafter be reviewed by the HREDRB, together with all the required annexes or attachments thereto, for approval of and signing by the Secretary.

SECTION 16. Escrow Allotment or Aggregation Prior to Approval of the Project or Building Plan. — If at the time of the execution of the MoA the project or building plan has not yet been submitted or approved, together with the bill or costing of materials and labor, the total amount of escrow to be allotted or aggregated for allotment shall be based on industry-accepted land development or construction cost, and any deficiency or excess thereof after release of all or of the required allotment shall be addressed in accordance with either Section 9 or Section 19 hereof.

SECTION 17. Registration and Monitoring by the Regional Office. — Upon approval and signing, a copy of the MoA shall be furnished to the RO concerned for the registration of the socialized housing and for the monitoring of the implementation and completion of the participation of the developer/s in accordance with the submitted work program and schedule of release of the escrow amount.

SECTION 18. Release of the Escrow Deposit. — The escrow shall only be released upon written instruction by the RO, either fully or partially, in favor of the developer or the selected third party contractor, strictly in accordance with the scheduled progress billing, monitoring and accomplishment or completion.

Within ten (10) working days after monitoring or issuing an escrow release order, the RO shall furnish the HREDRB a copy of its monitoring report and order of escrow release.

SECTION 19. Certificate of Full Compliance. — The Certificate of Full Compliance shall be issued in favor of the developer:

19.1 Who is made a party and signatory to the MoA, if upon monitoring, the participation has been fully developed or constructed in accordance with the work program provided, and the full escrow amount, or at least eighty percent (80%) thereof, has been released; or

19.2 Who is not required to be a party or signatory to the MoA in accordance with Section 9.2 hereof but whose escrow deposit has been allotted and utilized by at least eighty percent (80%) thereof.

Should there still be unreleased amount in any of the aggregated escrow deposits that is in excess already of the total cost of the participation after full development or construction, the same shall, as much as possible, be given priority in subsequent releases for participation in other projects as may be selected by the Department.

SECTION 20. Penalties. — Appropriate sanctions, including the suspension of the license to sell of the main project/s, shall be imposable, for any delay in the implementation or non-completion of the participation attributable to the fault or negligence of the developer/s. The existing monitoring rules and procedures and schedule of fines and penalties of the Department shall be applicable or suppletory.

SECTION 21. Separability Clause. — The provision of this Supplemental Guidelines are separable, and in the event that any provision herein is declared null and void or ineffective, the validity of all other provisions shall not be affected thereby.

SECTION 22. Transitory Provision. — This Memorandum Circular shall apply to all projects with pending application for issuance of CR/LS upon effectivity hereof, and to all projects that may be filed upon its effectivity.

SECTION 23. Effectivity. — This Memorandum Circular shall take effect immediately. ATICcS

(SGD.) EDUARDO D. DEL ROSARIOSecretary