OFFICIAL GAZETTE OF THE REPUBLIC OF THE PHILIPPINES

THE OFFICIAL GAZETTE IS THE OFFICIAL JOURNAL OF THE

REPUBLIC OF THE PHILIPPINES. EDITED AT THE OFFICE OF
THE PRESIDENT OF THE PHILIPPINES UNDER
COMMONWEALTH ACT NO. 638
Republic Act No. 7835
December 16, 1994
No. 11184
S. No. 1677

Republic of the Philippines

Congress of the Philippines
Metro Manila

Third Regular Session

Begun and held in Metro Manila, on Monday, the twenty-fifth

day of July, nineteen hundred and ninety-four.

[REPUBLIC ACT NO. 7835]

AN ACT PROVIDING FOR A COMPREHENSIVE AND

INTEGRATED SHELTER AND URBAN DEVELOPMENT
FINANCING PROGRAM BY INCREASING AND REGULARIZING
THE YEARLY APPROPRIATION OF THE MAJOR COMPONENTS
OF THE NATIONAL SHELTER PROGRAM, INCLUDING THE
ABOT-KAYA PABAHAY FUND UNDER REPUBLIC ACT NO. 6846,
AUGMENTING THE AUTHORIZED CAPITAL STOCK AND PAID-
UP CAPITAL OF THE NATIONAL HOME MORTGAGE FINANCE
CORPORATION (NHMFC) AND THE HOME INSURANCE AND
GUARANTY CORPORATION (HIGC), IDENTIFYING OTHER
SOURCES OF FUNDING AND APPROPRIATING FUNDS FOR THE
PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Title. – This Act shall be known as the “Comprehensive

and Integrated Shelter Financing Act of 1994.”

SEC. 2. Declaration of Policy. – It is hereby declared a policy of the

State to undertake, in cooperation with the private sector, a
continuing program of urban land reform and housing which will
make available, at affordable cost, decent housing and basic services
to underprivileged and homeless citizens in urban centers and
resettlement areas.

In recognition of the role of housing as catalyst of economic growth

and development, it is hereby declared a state policy to strengthen,
promote and support the component activities of housing production
and finance.

SEC. 3. Statement of Objectives. – Towards this end, the State shall:

(a) Ensure continuous funding support to vigorously implement the

government’s programs for urban and rural housing, resettlement,
the development of sites and services, and the renewal of blighted
areas;

(b) Enhance the capability of low-income groups to acquire decent

and low-cost housing units through the introduction of support
mechanisms and facilities which shall render affordable such
acquisitions;

(c) Provide for a strong and sustainable housing finance program with
complementary support systems, which will pump prime, build up
and strengthen available sources of cheap and long-term capital;

(d) Increase the public and private sectors’ participation in the

investment of their funds into the mainstream of housing finance for
developmental and end-user financing requirements of the National
Shelter Program;

(e) Enjoin the active participation of the local government units in the
socialized housing programs through adequate measure or housing
development in their respective areas;

(f) Strengthen the capital base and optimize the resources of the
National Government and the government’s housing institutions
towards a balanced, coordinated and integrated shelter delivery
system;

(g) Serve the housing requirement of all the underprivileged and

those gainfully employed but are not’ members of any funding
agencies such as GSIS, SSS, and Pag-Ibig; and

(h) Focus the government’s full financial, technical and manpower

resources in addressing the shelter needs of the lowest thirty percent
(30%) of the population and with the private sector’s cooperation, the
higher socioeconomic percentiles of our country’s population.

SEC. 4. National Shelter Program Implementation. – Consistent with

the aforementioned policy and objectives, the Housing and Urban
Development Coordinating Council (HUDCC), through the respective
agencies, shall intensify the implementation of the vital components
of the National Shelter Program requiring government budgetary
assistance as follows:

(a) Resettlement Program. This program shall involve land

acquisition and site development by the National Housing Authority
to generate serviced homelots for families displaced from sites
earmarked for government infrastructure projects, those occupying
danger areas such as water ways, esteros, railroad tracks and those
qualified for relocation and resettlement assistance under Republic
Act No. 7279. To sustain this program, the NHA shall engage in land
banking activities to ensure availability of land.
(b) Medium-Rise Public and Private Housing. This shall entail the
construction of medium-rise residential buildings by the government
and/or private developers in all high-density urban areas of the
country to maximize the utilization of scarce, high-cost urban land,
except in areas where there are existing arrangements on housing
and/or land utilization prior to the effectivity of this Act. Low-income
families and other beneficiaries as defined in Republic Act No. 7279
shall gain access to the program either through direct sale with
homebuyers’ financing assistance or through lease arrangement
pending on the affordability of the intended beneficiaries.

Implementation of this program shall be carried out by the following

agencies:

(1) The National Housing Authority (NHA). The NHA is hereby

mandated to formulate policies and guidelines pertinent to the
implementation of the Medium-Rise Public and Private Housing
Programs. It shall likewise take over portions of military lands in
Metro Manila and other urban areas, except those previously
identified and segregated for specific purposes pursuant to pertinent
legal issuances for the development of Medium-Rise Housing. It is
likewise mandated to formulate, adopt and promulgate systems that
will enable the private sector to participate in the Medium-Rise
Housing Program of the government to augment current rental
housing stock;

(2) The National Home Mortgage Finance Corporation (NHMFC).

The NHMFC is hereby mandated to provide homebuyer’s financing,
to formulate and implement a schedule of amortization payments for
the Medium-Rise housing facilities and implement schemes that
would ensure an effective and efficient recovery and collection of
government investments in the program;

(3) The Local Government Unit (LGU) or the Public Estates Authority
(PEA). Upon the completion of all public rental housing facilities
constructed under this program, the LGU or the PEA shall assume the
administration of the said facilities to include the implementation of
the Estate Management Policies and to ensure the efficient and
effective recovery and collection of rental and other fees due the
government from the beneficiaries of the public housing program. It
shall maintain the physical integrity of the public rental housing
facilities including those of its immediate environs. The HUDCC,
NHA and PEA are mandated to formulate the policies and guidelines,
rules and regulations in the administration and management of the
public rental housing facilities, in consultation with the LGU and the
Presidential Commission for the Urban Poor; and

(4) The Presidential Commission for the Urban Poor (PCUP). The
PCUP is hereby mandated to coordinate with the NHA, and the
concerned LGU or the PEA in the identification and processing of
qualified beneficiaries of public rental housing facilities provided for
in this Act. The PCUP shall likewise formulate and implement
preoccupancy educational programs to enable the beneficiaries of the
program to adapt to medium-rise living conditions, and shall
organize them into homeowners associations which would ensure
proper day-to-day maintenance of said facilities.

(c) Community Mortgage Program. Under R. A. No. 7279, this

program, through the National Home Mortgage Finance Corporation
(NHMFC), shall assist organized community associations to acquire
tenure and ownership of the land they are presently occupying
adverse against the interests of landowners. Financing at very low
interest rate is granted to beneficiaries to purchase the land as a
whole and to improve the sites.

(d) Cost Recoverable Programs. These programs shall involve the

development of sites with housing component and the provision of
serviced home lots through joint-venture schemes with the private
sector or local government units. Program beneficiaries shall fully
repay on installment basis the financial assistance granted for the
purchase of the housing units.

(e) Local Housing. To ensure the equitable distribution of housing

benefits across the country, the NHA is hereby tasked to implement
cost-recoverable socialized housing projects in selected urban and
urbanizable areas in all congressional districts. Criteria for the
selection of sites shall be formulated by the HUDCC and NHA
pursuant to Republic Act No. 7279.

SEC. 5. Trust Fund or the National Housing Authority. – To enable

the National Housing Authority to carry out the programs mandated
under this Act, specifically the Medium-Rise Public and Private
Housing and the Local Housing Programs, a Trust Fund to be
managed and administered by the NHA is hereby created. The
mechanics of said Trust Fund shall be formulated by the NHA, the
Department of Finance, the Department of Budget and Management
and other concerned agencies in accordance with pertinent policies
and subject to auditing and accounting procedures of the Commission
on Audit.

SEC. 6. Capitalization of National Home Mortgage Finance

Corporation (NHMFC). – The authorized capital stock of the NHMFC
is hereby increased from Five hundred million pesos (P500,000,000)
to Five billion five hundred million pesos (P5,500,000,000) to
expand its leveraging capability based on the volume of mortgage
loans being serviced, to approve its profitability by reducing the
average cost of its funds made available for how-lending programs,
and to enable the NHMFC to maintain the debt-to-equity ratio of
10:1. Thus, Section 3 of Presidential Decree No. 1267 is hereby
amended to read as follows:

“SEC. 3. Capitalization. – The Corporation shall have an authorized

capital stock of Five billion five hundred million pesos
(P5,500,000,000) divided into Five million five hundred thousand
(5,500,000) shares of common stocks with a par value of One
thousand pesos (P1,000) per share, to be fully subscribed and paid by
the Government of the Republic of the Philippines.

“There shall be a continuing annual appropriation to be remitted to

the Corporation starting from calendar year 1995, and subsequently
thereafter until the entire authorized capital stock shall have been
fully paid: Provided, however, That the National Government loan
relent to the corporation in the amount of US$76.73 Million under
the World Bank Financed Housing Sector Project is hereby converted
to equity.”

SEC. 7. Capitalization of Home Insurance Guaranty Corporation

(HIGC). – The authorized capital stock of the HIGC is hereby
increased from One billion pesos (71,000,000,000) to Two billion
five hundred million pesos (P2,500,000,000) to strengthen the
capability of the Corporation in the provision of guarantee,
loan/credit insurance and other incentives to assist home
building/development and to sustain housing finance: Provided,
however, That the aggregate amount of the outstanding guaranty
obligations shall not, at any one time, exceed twenty (20) times the
capital and surplus of the HIGC.

Accordingly, Sections 3 and 5 of Executive Order No. 535 are hereby

amended to read as follows:

“SEC. 3. The authorized capital of the Corporation shall be Two

billion five hundred million pesos (P2,500,000,000), divided into
Two million five hundred thousand (2,500,000) shares of common
stocks, with a par value of One thousand pesos (P1,000) per share to
be fully subscribed and paid by the Government of the Republic of the
Philippines.”

“There shall be a continuing annual appropriation of at least Three-

hundred million pesos (P300,000,000) starting 1995 and
subsequently thereafter until the entire authorized capital stock of the
Corporation such have been paid in full.

“SEC. 5. The Republic of the Philippines hereby guarantees to

payment by the Corporation both of the principal sums and interests
of the bonds, debentures, collateral, notes or other such obligations of
the Corporation, issued or incurred by virtue of its Charter and this
Executive Order and shall pay such principal sums and interest in the
event that the Corporation fails to do so: Provided, however, That the
aggregate amount of the outstanding obligations shall not, at any one
time, exceed Twenty (20) times the capital and surplus of the
Corporation.

“In such event, the Republic of the Philippines shall succeed to all the
rights of the holders of such bonds, debentures, collateral, notes or
other instruments to the extent of the payments made, unless the
sums so paid by the Republic of the Philippines shall be refunded by
the Corporation within a reasonable time.”

SEC. 8. Expanding the Scope and Usage of the Abot-Kaya Pabahay

Fund. – To be more responsive to the need of enhancing affordability
of low-income families to acquire housing and to provide a strong
support system for the operation of a secondary mortgage market
system by the NHMFC as a stable source of long-term funds for
housing finance, the Abot-Kaya Pabahay Fund shall be made a
continuing support system of the National Shelter Program, with its
scope, usage and coverage accordingly expanded.

The existing total budgetary allocation of Two billion five hundred

million pesos (P2,500,000,000) of the Abot-Kaya Pabahay Fund
under Republic Act No. 6846 shall be increased to Five billion five
hundred million pesos (P5,500,000,000) and shall be appropriated
until such time that the total funding required under this Act shall
have been released.

(a) Additional One hundred million pesos (P100,000,000) annually

to the cash flow guarantee to extend the mortgage insurance coverage
for housing loans within the lowest interest loan package under the
Unified Home Lending Program as a cushion against loan
delinquency and ensure a viable cash flow for agencies extending
housing loans.

(b) Annual allocation of Five hundred million pesos (P500,000,000)

as liquidity and interest/subsidy support to the secondary mortgage
market operation of NHMFC to serve as an alternative mechanism for
sourcing housing funds, tapping in the process private and public
long-term development funds.

The Abot-Kaya Pabahay Fund shall be allocated annually among its

various components in the following amounts:

P300 Million – Cash flow guarantee;

P500 Million – Interest subsidy and liquidity support;

P200 Million – Amortization support; and

P100 Million – Development financing.

The Housing and Urban Development Coordinating Council
(HUDCC) shall, from time to time, determine the income ceilings and
the loanable amounts for both levels (a) and (b) borrowers and the
socialized/low-cost housing limit eligible for development financing.

The Abot-Kaya Pabahay Fund shall bear the cost of its administration
and development in such amount and/or limits as the administering
agencies shall deem appropriate, but not exceeding three percent
(3%) of the net assets of the previous year. Expenses for organization
and initial operation shall be provided by the administering agencies
as advances, subject to reimbursement.

Section 3, paragraphs 1, 2, 3, and 4, and Section 7 of R. A. No. 6846

are hereby amended accordingly.

SEC. 9. Appropriations by the National Government. – The

corresponding amounts specified hereunder shall be appropriated
annually for a period of five (5) years or until such time that the total
fund requirement provided for in this Act shall have been fully
released specifically for the following programs:

(a) Five billion and two hundred million pesos (P5,200,000,000) to

finance the Resettlement Program under Section 4(a) of this Act;

(b) Three billion pesos (P3,000,000,000) as subsidy for land

acquisition, construction and implementation of the Medium-Rise
Public and Private Housing Program mandated under Section 4(b) of
this Act;

(c) Twelve billion seven hundred eighty million pesos

(P12,780,000,000) for the community mortgage program under
Section 4(c) of this Act;

(d) Two billion five hundred forty-two million pesos (P2,542,000,

()00) for the cost recoverable program under Section 4(d) of this Act;
and
(e) Three billion pesos (P3,000,000,000) for the Local Housing
Program under Section 4(e) of this Act.

There shall be a continuing annual appropriation in the total amount

of not less than Five billion pesos (P5,000,000,000) starting from the
fiscal year 1995 and every fiscal year thereafter until such time that
the total funding requirement under this Act shall have been fully
released: Provided, however, That any fund in excess of the total
funding requirements under this Act that may be derived from any or
all of the sources provided herein, shall be used to augment the
NHA’s Resettlement Program fund to cushion the impact of
displacement arising from eviction and demolition as provided in
Section 28 of R. A. No. 7279, to wit:

(a) When persons or entities occupy danger areas such as esteros,

railroad tracks, garbage dumps, river banks, 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.

SEC. 10. Fund Sources. – The National Government is hereby

mandated to allocate and appropriate the necessary funds for the
continuing requirements of this Act, including whatever funds which
may be made available from, but not limited to, the following sources:

(A) Proceeds from documentary stamp tax: Provided, That Section

22(a) of Republic Act No. 7660 shall be amended to read as follows:

“SEC. 22. The incremental revenues from the increase in the

documentary stamp taxes under this Act shall be set aside for the
following purposes:
“(a) Twenty-five percent (25%) of the incremental revenues in 1994
and 1995 under this Act shall be automatically appropriated for the
Unified Home Lending Program under Executive Order No. 90
particularly for mass-socialized housing to be allocated as follows:
fifty percent (50%) for mass-socialized housing; thirty percent (30%)
for the community mortgage program administered by the National
Home Mortgage Finance Corporation; and twenty percent (20%) for
land banking and development to be administered by the National
Housing Authority: Provided, That not more than one percent (1%) of
the respective allocations hereof shall be used for the administrative
expenses: Provided, further, That incremental revenues not
appropriated in 1994 and 1995 shall be carried over to succeeding
years until allocations herein provided shall have been fully
exhausted.”

“x x x”

(B) Forty percent (40%) of the mandatory fifty percent (50%) share of
the National Government from the annual aggregate gross earnings of
the Philippine Amusement and Gaming Corporation (PAGCOR), as
provided for in Section 12 of Presidential Decree No. 1869, beginning
1996.

(C) Twelve percent (12%) of all the proceeds of any sale, after
deducting all expenses related to the sale, of portions of Metro Manila
military camps shall be used to finance mass social housing projects
for underprivileged and homeless citizens of the country. Section 8 of
Republic Act No. 7227, therefore, is hereby amended accordingly.

(D) All fund sources outlined in Republic Act No. 7279, not accruing
to the local government units, to wit:

(1) A minimum of fifty percent (50%) from the annual net income of
the Public Estates Authority to be used by the National Housing
Authority to carry out its program of land acquisition for resettlement
purposes;

(2) Proceeds from ill-gotten wealth not otherwise previously set aside
for any other purpose;
(3) Loans, grants, bequests and donations, whether from local or
foreign sources; and

(4) Proceeds from the sale or disposition of alienable public lands in

urban areas.

(E) Proceeds from forfeited customs bonds; and

(F) A maximum of fifty percent (50%) of savings from the budgeted

amount for debt servicing.

SEC. 11. Other Fund Sources. – The following non-budgetary funding

sources shall be used to augment those mentioned in the preceding
section in the implementation of a Comprehensive and Integrated
Shelter and Urban Development Financing Program:

(a) Ten percent (10%) of the mandatory annual contributions by

Philippine Charity Sweepstakes Office to the charity fund as provided
for in Section 6 of R. A. No. 1169 shall be channeled to socialized and
low-cost housing;

(b) All unused agri-agra allocation funds from banks in the preceding
year shall be invested in socialized and low-cost housing: Provided,
That the used agri-agra portion has been solely devoted to
agricultural or agrarian reform credit; and

(c) The Bangko Sentral ng Pilipinas shall make available its

rediscounting facilities to institutions or entities providing financing
for socialized and low-cost housing in amounts and rates to be
determined by the Monetary Board, taking into consideration the
policy of the State as enunciated in this Act.

SEC. 12. Audit. – The Commission on Audit shall be the ex officio

Auditor of all the funds provided for in this Act and is, accordingly,
empowered to designate and appoint its representative(s) and other
subordinate personnel to perform such necessary audit duties as the
Commission shall direct. They shall be responsible to and shall only
be removed by the Commission on Audit.

SEC. 13. Reports and Funding Program. – The National Shelter

Agencies are hereby mandated to submit semi-annual reports of their
operations, fund usage and performance to the Office of the President
and Congress. They shall likewise submit to Congress their plans and
funding programs for the succeeding year not later than the first
quarter of the current year.

SEC. 14. Sunset Review. – As the need arises, the Congress shall
conduct a sunset review of the accomplishments and impact of the
National Shelter Program as well as the performance of its
implementing agencies for purposes of determining whether or not
the programs and the corresponding appropriations mentioned in
this Act deserve to be continued based on a cost-benefit analysis
thereof. If the result of the review is unfavorable to any program or its
appropriate implementing program, then the Committee of Congress
that has legislative jurisdiction over such entity shall not report
favorably any bill or resolution which authorizes the enactment of a
new budget authority on such entity.

For purposes of this Act, the term “sunset review” shall mean, with
respect to any government program, a systematic evaluation by the
committees of the Senate and House of Representatives which have
legislative jurisdiction over such programs, with the assistance of
appropriate agencies and congressional support agencies, to
determine the merits of the program, justify its continuation rather
than termination or its continuation at a level less than, equal to, or
greater than the existing level. Such review shall be undertaken in the
scope and the detail the committee having jurisdiction deems
appropriate and shall include, but not limited to, an assessment of the
degree to which the original objective of the program has been
achieved, of the problem it was intended to address, and the costs and
benefits of the program.

SEC. 15. Implementing Rules and Regulations. – The HUDCC shall

promulgate rules and regulations necessary for the implementation of
this Act.
SEC. 16. Repeal. – All laws, decrees, executive orders, proclamations,
rules and regulations and other issuances, or parts thereof which are
inconsistent with the provisions of this Act, are hereby repealed,
amended or modified accordingly.

SEC. 17. Separability. – 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 effect.

SEC. 18. Effectivity. – This Act shall take effect fifteen (15) days after
its complete publication in at least two (2) national newspapers of
general circulation.

Approved,

(Sgd.) EDGARDO J. ANGARA

President of the Senate

(Sgd.) JOSE DE VENECIA, JR.

Speaker of the House
of Representatives

This Act which is a consolidation of House Bill No. 11184 and Senate
Bill No. 1677 was finally passed by the House of Representatives and
the Senate on December 12, 1994 and December 8, 1994, respectively.

(Sgd.) EDGARDO E. TUMANGAN

Secretary of the Senate

(Sgd.) CAMILO L. SABIO

Secretary General
House of Representatives
Approved:

DEC 16 1994

(Sgd.) FIDEL V. RAMOS

President of the Philippines

Source: Presidential Management Staff

RESOURCES
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