Category: Real Estate in the Philippines

Various topics on real estate, brokerage and the laws and regulations

  • Bill on REITs Signed into Law by November 2009?

    The Congress of the Philippines is getting closer to enacting a law that will regulate Real Estate Investment Trusts (REITs) in the country.

    As mentioned earlier, the House of Representatives last June 3, 2009 approved on Third Reading House Bill No. 6379 (An Act Providing the Legal Framework for Real Estate Investment Trusts and for Other Purposes). The bill is authored by Rep. Juan Edgardo M. Angara of the Lone District of Aurora and was filed last May 19, 2009.

    Meanwhile, Senate Bill No. 63 (An Act Providing the Regulatory Framework for Real Estate Investment Trusts and for Other Purposes) was filed last June 30, 2007 by Sen. Edgardo J. Angara. On September 24, 2008, the Committees on Banks, Financial Institutions and Currencies and Ways and Means approved the substitution of Senate Bill No. 63 to Senate Bill No. 2639, as per Committee Report No. 103.

    Senate Bill No. 2639 is entitled “An Act Providing the Regulatory Framework for Real Estate Investment Companies and for Other Purposes.” It was approved on third reading last March 2, 2009. Two days later, the Senate sent a copy of Senate Bill No. 2639 to the House of Representatives requesting for concurrence.

    On August 11, 2009, the House requested the Senate for a conference on the disagreeing provisions of Senate Bill No. 2639 and House Bill No. 6379. The Bicameral Conference Committee was scheduled on July 29, 2009. Another conference committee is scheduled sometime in September 2009 to iron out the remaining disagreeing provisions of SBN 2639 and HBN 6379.

    If all goes well then by late September the Bicameral Conference Committee Report will be ratified by both chambers of Congress. Soon thereafter, the bill will be sent to Malacañan for the signature of the President sometime in the first week of November 2009.

  • Can a Foreigner Become a Licensed Real Estate Service Practitioner in the Philippines?

    “Foreign real estate service practitioners can only be granted the of practicing this profession if the origin country of the person also allows Filipinos to practice real estate service in their country.”

    – Atty. Ernesto C. Perez II, CTEP, Real Estate Attorney

    This article was first published on August 18, 2009. It is now more than 14 years old and is time to update it because its information is still relevant to this day despite the amendments to the PRC Charter. The updates will be in blue fonts.


    By Realttorney®

    Can foreigners become licensed real estate service practitioners in the Philippines? The categorical answer is YES.

    However, it does not seem apparent when you look at the qualifications listed in Section 14 of Republic Act No. 9646, popularly known as the “Real Estate Service Act” (RESA). The first qualification provided therein states that the candidate for the licensure examination must be “a citizen of the Philippines.”

    Photo by Lukas on Pexels.com

    However, RESA does allow foreigners to have the opportunity to become licensed real estate service practitioners in the country under Section 24 (Foreign Reciprocity).

    The practice of real estate service is very much similar to the practice of medicine and all other professions that are regulated by the Professional Regulatory Commission (PRC), according to its mandate based on Presidential Decree No. 223, now Republic Act No. 8981 – The PRC Modernization Act of 2000.

    RESA grants the right to practice real estate service to a person after he or she passes the licensure examination given by the Professional Regulatory Board of Real Estate Service (See Section 12, RA 9646). If we are to read Sections 12, 14, and 24 side by side, Filipinos and foreigners who want to become licensed real estate service practitioners in the Philippines must first be qualified to take and pass the licensure examination.

    Numerous decisions of the Supreme Court have long recognized as a valid exercise of governmental power the passage of legislation and administrative regulations requiring those who wish to practice certain professions to take and pass licensure examinations. For further reference on this point, you can read the recent case of BOARD OF MEDICINE, ET AL., vs. YASUYUKI OTA (G.R. No. 166097, July 14, 2008).

    It must be stressed that the license to practice real estate service in the country is a privilege or franchise granted by the government. The power to regulate and control the practice of real estate service includes the power to regulate admission to the ranks of those authorized to practice real estate service.

    Now, what does a foreigner have to do to be qualified to take the licensure examination for real estate service? Under Section 24, the foreigner must prove that his country “specifically allows Filipino real estate service practitioners to practice within its territorial limits on the same basis as citizens of such foreign country.”

    How does a foreigner go about proving reciprocity? If you read RESA you cannot find the answer. The answer lies in Section 7 (j) of Rep. Act No. 8981 which defines the extent of the power of PRC to grant licenses.

    The said Section states that the PRC may, upon recommendation of the Professional Regulatory Board, approve the registration of and authorize the issuance of a certificate of registration/license and professional identification card with or without examination to a foreigner who is registered under the laws of his state or country and whose certificate of registration issued therein has not been suspended or revoked.

    It should be emphasized that the requirements for the registration or licensing in said foreign state or country are substantially the same as those required and contemplated by the laws of the Philippines and that the laws of such foreign state or country allow the citizens of the Philippines to practice the profession on the same basis and grant the same privileges as those enjoyed by the subjects or citizens of such foreign state or country.

    This provision means that the PRC is authorized to prescribe additional requirements or grant certain privileges to foreigners seeking registration in the Philippines if the same privileges are granted to or some additional requirements are required of citizens of the Philippines in acquiring the same certificates in the foreign country. 

    In addition, the Commission may, upon recommendation of the Board concerned, authorize the issuance of a certificate of registration/license or a special temporary permit to foreign professionals who desire to practice their professions in the country under reciprocity and other international agreements; consultants in foreign-funded, joint venture or foreign-assisted projects of the government, employees of Philippine or foreign private firms or institutions pursuant to law, or health professionals engaged in humanitarian mission for a limited period of time.

    Finally, agencies, organizations, or individuals whether public or private, who secure the services of a foreign professional authorized by law to practice in the Philippines for the reasons aforementioned, shall be responsible for securing a special permit from the Professional Regulation Commission (PRC) and the Department of Labor and Employment (DOLE), according to PRC and DOLE rules.

    Now, must the foreigner demonstrate to the PRC that the requirements of foreign law are practical and attainable by Filipinos? Or must the foreigner prove first that a Filipino has been granted a license and allowed to practice real estate service in said country?

    The case of the Board of Medicine vs. Ota says that “it is enough to prove that the laws in the foreign country permit a Filipino to get license and practice therein.” Hence, a foreigner need not prove first that a Filipino has already been granted a license and is actually practicing in his/ her country to be qualified for the licensure examination or be given a license without examination.

    To be required to do so would be an arbitrary exercise of the powers of the PRC as was held in the Ota case. All the foreigner has to do is to submit “competent and conclusive documentary evidence, confirmed by the Department of Foreign Affairs, showing that his country’s existing laws permit citizens of the Philippines to practice the profession under the rules and regulations governing citizens thereof.”

    Simply put, a foreigner must submit to the PRC a duly notarized English translation of the foreign law that grants him/her the right to practice real estate service in that foreign country, duly authenticated by the Consul General of the Philippine Embassy of the particular country. Now, this requirement is no longer found in Rep. Act No. 8981. And, until the requirements of the Ota case are abandoned by the Supreme Court, it is still considered as part of the law of the land.

    Finally, what about foreigners who are licensed real estate service practitioners in other countries? Can they practice their profession in the Philippines? YES, they can.

    For example, Realtors® from the United States can practice their profession in the country upon the recommendation of the Professional Regulatory Board of Real Estate Service (Board) to the PRC. Only after the PRC has approved the registration as well as authorized the issuance of a certificate of registration with or without examination. [See Section 7 (j), Rep. Act No. 8981]

    If a US Realtor® is issued a certificate of registration with or without examination by the PRC then he/she can practice as a real estate service professional in the country. However, if this does not appeal to the US Realtor® then he/she has a final option.

    It is also provided in RESA that the “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 purpose of promoting or enhancing the practice of the profession in the Philippines.” (Section 23)

    Hence, if the US Realtor® is issued a special/temporary permit by the PRC then he/she can probably serve a foreign corporation that would want to lease land or any other real property in the country that foreigners can purchase.

    Moreover, under Section 7 (l), Rep. Act No. 8981, the Commission has the power to supervise professionals who were former citizens of the Philippines and who had been registered and issued a certificate of registration and a professional identification card prior to their naturalization as foreign citizens, who may, while in the country on a visit, sojourn or permanent residence, practice their profession: Provided, That, prior to the practice of their profession they shall have first been issued a special permit and updated professional identification card by the Board concerned subject to approval by the Commission and upon payment of the permit and annual registration fees.

    However, it seems absurd for the PRC to issue a temporary or special permit to a foreign real estate practitioner due to the unavailability of Filipino licensed real estate service practitioners in the country at this time.

    I think with the more than 40,000 licensed real estate practitioners in the country any foreign or local corporation will be able to find a professional to their liking who will serve them with utmost competence, respect, and responsibility as compared to a foreign real estate service practitioner.

    But, should you be able to provide me with a better example of why the PRC will issue a special/temporary permit to a foreign real estate service practitioner then please do inform me.

    ——-

    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/Speaker for Training Programs in Real Estate. He is committed to helping new and veteran real estate service practitioners be well-informed of the latest laws, rules, regulations, and information relevant to the real estate service sector.

  • Real Estate Investment Trust Act of 2009

    Another important piece of legislation that real estate service professional must take notice of is the bill known as the Real Estate Investment Trust Act of 2009.

    Hon. Juan Edgardo M. Angara, Representative of the Lone District of Aurora filed the bill in May 19, 2009. HB 6379 is entitled “AN ACT PROVIDING THE LEGAL FRAMEWORK FOR REAL ESTATE INVESTMENT TRUSTS AND FOR OTHER PURPOSES”. It was approved on Third Reading last June 3, 2009.

    For further information on REITS, kindly read the online new report by clicking on the link below: http://www.businessmirror.com.ph/home/economy/14084-house-bill-proposes-to-regulate-real-estate-investment-trusts.html

    A similar bill was filed by Sen. Edgardo J. Angara in June 30, 2007 at the Senate of the Philippines. Senate Bill No. 63 is entitled “AN ACT PROVIDING THE REGULATORY FRAMEWORK FOR REAL ESTATE INVESTMENT TRUSTS AND FOR OTHER PURPOSES”. Although Sen. Angara has issued a press statement that the passage of the said Senate bill in the 14th Congress is imminent. However, there is no evidence at this time to verify the veracity of such a statement.

    According to the bill, a “real estate investment trust” (REIT) is a stock corporation formed for the sole purpose of investing in income-producing real estate assets. Income producing properties include apartment buildings, office buildings, warehouses, medical facilities, hospitals, mixed industrial/office buildings and other commercial and residential properties.

    Sen. Angara says that in other jurisdictions, the real estate investment trust regime has also been used to help develop the tourism industry by building resorts, hotels, shopping centers, outlets as well as develop other infrastructure projects like highways, railroads, prisons, and other similar projects

    The Gentleman from Aurora argues that main the purpose of REIT is to provide small and large investors alike with the opportunity to participate directly in the ownership and financing of large-scale real estate projects at affordable rates of investment, without the disadvantages of illiquidity, high transaction and management costs, as compared to traditional private real estate ownership.

    When the bill is enacted to law, REITs shall be allowed to invest in real estate, whether freehold or leasehold, in or outside of the Philippines; real estate-related assets, listed or unlisted debt securities and listed shares of or issued by local or foreign non-property corporations; government securities issued on behalf of the Philippine Government or governments of other countries and cash and cash equivalent items.

    This legal framework is designed to provide a similar structure for investments in the real estate industry in the same manner that mutual funds provide for investment in stocks and securities.

    More on REITs in future posts…

  • THE NEW AGE IN PHILIPPINE REAL ESTATE SERVICE – Part II

    I mentioned before that most of the provisions of RESA are now operational. However, absent the promulgation of the Implementing Rules and Regulations (IRR) some of the provisions of RESA cannot be fully implemented.

    The IRR, like the Republic Act itself, needs to be published before it can take effect. Its publication can be made in the Official Gazette or in a newspaper of general circulation as well. Thereafter, a copy of the IRR will be deposited with the University of the Philippine Law Center as the repository of all rules and regulations adopted/issued by the different government agencies. This is pursuant to the Administrative Code of 1987 (Executive Order No. 292, Series of 1987). For further information on this matter you can click on this link: http://law.upd.edu.ph/new/index.php/other-offices/onar

    According to Section 42 of RESA, the Professional Regulation Commission (PRC), the Professional Regulatory Board of Real Estate Service (Board), the accredited and integrated professional organization of real estate practitioners, the Department of Finance (DOF), and the Commission on Higher Education (CHED) shall prepare the necessary rules and regulations, including the Code of Ethics and Responsibilities (Code) of real estate service practitioners, needed to implement the provisions of RA 9646.

    Major legislation such as the RESA needs a careful drafting of the IRR. Most likely, there will be an Inter-Agency Technical Committee that will be created to draft the IRR of RESA. This has been my experience when I was working as a Senior Staff to several Senators of the Republic way back in 1998 to 2001 and in 2004 to 2007.

    And based on the same provision of law, the Inter-Agency Technical Committee that will be establish for this purpose should finalize and promulgate the IRR and the Code on or before January 30, 2010. Six (6) months may seem to be a whole lot of time to draft and promulgate the IRR and the Code, but this is no guarantee. PAREB can do a lot to see to it that a well crafted IRR is made to fulfil the State Policy of developing and nurturing “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.” (Section 2, RA 9646)

    There is still a long way to go before RESA is fully implemented. I think one of the tricky matters that will be discussed in the drafting of the IRR concerns the “accredited and integrated professional organization of real estate practitioners”. Section 34 of RESA mandates that “all real estate service association shall be integrated into one (1) national organization, which shall be recognized by the Board,” subject to the approval of the PRC.

    As far as I know, there are only two (2) main real estate service association recognized by the DTI prior to the effectivity of RESA. On one hand, PAREB has the largest number of members who are licensed real estate brokers. PAREB’s affiliates are the Institute of Real Estate Appraisers (IPREA) and Institute of Real Estate Consultants (IPREC). On the other, the Real Estate Brokers Association of the Philippines, Inc. (REBAP) has more than 500 regular and associate members spread over 21 chapters in Metro Manila and the provinces.[2] Both organizations have adopted their own Code of Ethics and all its members share the passion, commitment and fulfilment as real estate service practitioners.

    One may think that it will be a challenge to integrate two strong and vibrant organizations into one national organization that shall be recognized by the Professional Regulatory Board of Real Estate Service (Board) as the only accredited and integrated professional organization of real estate service practitioners. A single organization will be born where all licensed real estate brokers, appraisers and consultant shall belong to represent their vision, interests and aspirations.

    Accreditation and integration of one national organization is extremely important in the full implementation of RESA. Why? First of all, the Accredited and Integrated Professional Organization (AIPO) shall help in the crafting of the IRR. The organization is a vital cog in the preparation, debate and overall drafting of the IRR.

    Second, the AIPO is the entity mandated to submit to the PRC (pursuant to Section 4) the names of the nominees for the position of Chairman and the four (4) members of the Board. Without the AIPO the positions on the Board cannot be filled up. Third, the AIPO will be the entity issuing (pursuant to Section 38) the APO numbers which shall be indicated on the document the real estate practitioners “sign, uses or issues in connection with the practice of [their] profession.” And finally, the AIPO shall be the consultant of the Board when it develops, prescribe and promulgate guidelines on the Continuing Professional Education (CPE) program as provided in Section 36. Moreover, in the same provision of law, a member of the AIPO shall be a member of the CPE Council that will be created by the Board.

    Now, when there is one national organization already in place, “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 practitioners, and shall receive the benefits and privileges appurtenant thereto.” Similar to the Integrated Bar of the Philippines (IBP), Section 34 provides for the mandatory integration of all real estate service practitioners.

    However, “membership in the accredited and integrated professional organization of real estate service practitioners shall not be a bar to membership in other associations of real estate  service practitioners.” Again, using the IBP as my analogy, membership in the IBP does not prevent me from joining the Philippine Bar Association, which is the oldest voluntary national organization of lawyers throughout the country, or the Las Piñas Bar Association for that matter. The law does not curtail the freedom of association of real estate service practitioners.

    Now, when I said that the integration into one (1) national organization is TRICKY, what I really meant was the intense jockeying and the politicking that will ensue in determining who gets to head the integrated national organization. It is safe to assume that such is a position of great influence in the real estate industry. My experience working for Senators will validate these statements of mine. The end all and be all of the discussion is: Who gets to lead the accredited and integrated professional organization that will be recognized by the Board?

    Let’s leave the brewing political storm and ask more mundane questions. For example, what are the relevant bachelor’s degree is being referred to in Section 14 (b) in the meantime that a Bachelor’s Degree in Real Estate Service is still in the drawing board of CHED?

    Most will agree with me that there is no single college degree that encompasses the various topics mentioned in Section 13 (c), except a Bachelor’s Degree in Real Estate Service. Without sounding too biased, the closest degree I can think of is the Bachelor of Laws degree. But there are others that can be considered.

    A degree in Legal Management, Business Management or even Accountancy may be what is being referred to in Section 13 (c). I am sure that you have thought of what degree may be considered relevant in the absence of a Degree in Real Estate Service. Whatever it is, the PRC will announce which relevant bachelor’s degree is appropriate as a qualification to be admitted to the licensure examination.

    One final note as I end my discussion, it must be remembered that the Chairman and the four (4) members of the Board are themselves licensed real estate service practitioners. Aside from having good moral character, they must be persons of proven probity, integrity and beyond reproach. Why? Because these are the people who will supervise and regulate our practice as real estate service professionals. We will look up to them for guidance and inspiration.

    In conclusion, I asked in Part I if RESA will really be the instrument that will professionalize the ranks of real estate service practitioners? Will it discipline rogue practitioners? I do not know the answer to these questions because much of it depends on the practitioners’ behaviours, morals and their strict adherence to the Code of Ethics.

    Every time a licensed real estate broker transacts with a unlicensed or pseudo real estate broker then he or she weakens the resolve of others. “If-he-can-get-away-with-it-so-can-I” attitude becomes prevalent. Every time a licensed real estate broker transgresses the Code of Ethics, he or she creates a ruckus and infuriates a lot of people casting a dark shadow over the entire profession.

    The fine and imprisonment provided by RA 9646 are not deterrents to those who will act malevolently and besmirch the reputation of honest and straightforward real estate service practitioners. But, as I have said, it does matter when the Chairperson and Members of the Board are persons who are respected by everyone in the industry. We can rely on them to enforce the law even if, after conviction, the accused will apply for probation and will not spend a single day behind bars.

    So what am I saying here? The future of the real estate industry does not rest in the passage of the law now matter how important one thinks of it. For what is the law but simply the rules to govern the conduct of men. It takes individual effort to become technically competent, responsible and respected.

    And, it also takes intense individual effort to police yourself, to follow the rules on ethics and shun the monetary rewards in exchange for principled way of conducting your business as licensed real estate service professionals. So how do we professionalize our ranks? One person at a time. 

    I exhort you to join the discussion in the preparation of the IRR and National Code of Ethics and Responsibility. We must provide meaningful inputs for the members of the body that will be tasked with such an important and daunting task.


    [1] Based on the REBAP website: http://www.rebap.com.ph/about-us.html

  • THE NEW AGE IN PHILIPPINE REAL ESTATE SERVICE – Part I

    As all licensed real estate brokers probably know, Republic Act No. 9646, popularly known as the “Real Estate Service Act of the Philippines” (RESA) was signed into law last June 29, 2009. Subsequently, it was published on July 15, 2009. I read a copy of the law in the Business section of the Philippine Daily Inquirer (page B10 to be exact). Hence, pursuant to Section 45 of the law, RESA became effective last Thursday, July 30, 2009.

    But what does this exactly mean for us REALTORS®[1]?

    Simply put, most of the provisions of the law are now operational. However, absent the promulgation of the Implementing Rules and Regulations (IRR) some of the provisions of RESA cannot be fully implemented.

    But, while waiting for the IRR to be promulgated, what can we expect of this piece of legislation that took more than a decade to be passed into law by Congress? Will it really professionalize the ranks of real estate service practitioners? Will it discipline rogue practitioners?

    In anticipation of the effectivity of RA 9646, the Department of Trade and Industry (DTI) has already suspended its accreditation of entities that will conduct the Comprehensive Real Estate Seminar and Review (CRESAR) after July 30, 2009. It knows that upon the effectivity of RESA, DTI loses its regulatory powers over the practice of real estate service practitioners.

    Furthermore, Section 41 mandates the DTI-Bureau of Trade Regulation and Consumer Protection (BTRCP) to “transfer all pertinent records, documents and other materials to the Professional Regulatory Board of Real Estate Service” on or before October 28, 2009 – counting ninety (90) days from the effectivity of the Act.

    Ordinarily, it should be expected that by October 28, 2009 the Professional Regulatory Board of Real Estate Service (Board) has already been constituted and discharging the powers and functions outlined in Section 5 of RESA. However, this expectation is not a certainty considering that Section 42 has provided a much longer period for the preparation of “the necessary rules and regulations… needed to implement the provisions of this Act.” More on this point in Part II of this article.

    I have to be honest with you, my motivation in wanting to be a licensed real estate broker is embodied in Section 20 of RESA. I don’t know how tough the licensure examination will be once the Professional Regulation Commission (PRC) takes over the supervision of real estate service practitioners. So, I took my chances last May 31, 2009.

    After passing the examination, I applied for my license with the DTI and joined the Muntinlupa Realtors Board (MUNREB) of PAREB. I knew that once I am a licensed real estate broker and engaged in the active practice as real estate broker on the day of the effectivity of RESA I will be exempt from taking the licensure examination to be given by the Board in the future.

    Under RESA, I am what is known as a “qualified applicant for registration without examination”. As such, I am required (1) “to take an 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” and (2) “to post a professional indemnity insurance/cash or surety bond” pursuant to Sections 25 and 26 of RA 9646, respectively.

    Section 26 tells us that the insurance/cash or surety bond is renewable every three (3) years, in an amount to be determined by the Board, but in no case shall be less than Twenty Thousand Pesos (Php 20,000.00), without prejudice to the additional requirement of the client.

    This boldfaced and underlined clause in Section 26 is a quandary. I think this clause is misplaced, to say the least. What if the a client of mine requires me to put in escrow for one (1) year my commission just to be sure that the transaction is above board and to answer for any damage that will result if and when fraud is discovered? This may be an absurd requirement but such absurdity is not far-fetched. Furthermore, different clients will have different requirements. There should be a standard for me to follow and not be at the mercy of someone else. And whose client are we talking about here? Is it the client of the buying broker or selling broker? Why would the law allow a third person to give additional requirements as a prerequisite to carrying out my profession?

    Moreover, if we are to be strict in the interpretation of the law, Section 25 requires me to take an oath before a pre-determined individual “prior to entering into the practice of real estate service in the Philippines.” Does this mean that I am disallowed to be a real estate service practitioner in the country until I have taken my oath before the person named in Section 25?

    Remember, the law allows a period of six (6) months for the IRR to be prepared and promulgated. It is good if the IRR will be promulgated tomorrow. But that is wishful thinking. In the meantime, what will I do while waiting for the Board to be constituted and its Chairman and members appointed? I certainly should be allowed to perform my service to my clients. Sadly, this matter was not covered in the transitory provision of the law.

    Certainly, every real estate service practitioner should know by heart Section 3 (g) of RESA. It defines who we are and what we do. Section 27 states that any single act or transaction within the purview of Section 3 (g), when performed by real estate service practitioner, shall constitute an act of engaging in the practice of real estate service.

    This is important because Section 29 prohibits any person from engaging in the practice of real estate service unless he or she is a licensed real estate service practitioner and registered in the roster of real estate service practitioners prepared and maintained by the Board.

    Before one gets to be a licensed and registered real estate service practitioner under RESA, a person must (1) have passed the licensure examination or be exempt from it under Section 20; (2) be a holder of a valid certificate of registration and professional identification card (pursuant to Section 17) or a valid special/temporary permit (pursuant to Section 23); and (3) have paid the required bond pursuant to Section 26, in case of real estate brokers and private appraisers.

    If a person is engaged in the practice of real estate service absent all these requirements abovementioned, then he or she is in violation of RA 9646 and under Section 39 shall be meted the penalty of a fine not less than Two Hundred Thousand Pesos (Php 200,000.00) or imprisonment of not less than four (4) years, or both upon the discretion of the Court. For other violations of the provisions of RESA the penalty is only One Hundred Thousand Pesos (Php 100,000.00) or imprisonment of not less than two (2) years, or both upon the discretion of the Court also.

    As with other statutes, when a 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 principal or as co-principal with the other participants, if any.” (Last paragraph of Section 39)

    Kindly note that the prohibition against the unauthorized practice of real estate service is not absolute and allows for several exceptions found in Section 28 of RESA. First, a person – natural or juridical – may perform the acts mentioned in Section 3 (g) with reference to his/her or its own property only, with the exception of real estate developers. Second, any receiver, trustee or assignee in bankruptcy or insolvency proceeding is exempt from the coverage of the law.

    Third, an executor or administrator in estate proceedings and a guardian in guardianship proceedings are some examples of exempt individuals acting pursuant to the order of any court of justice. Fourth, a person who is 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 does not violate the provision of RA 9646. And lastly, court sheriffs and registrars of deed are few illustrations of public officers who are exempt under Section 28 in the performance of their official duties and functions, with the exclusion of government assessors and appraisers.

    Once a person becomes a licensed and registered real estate service practitioner, he or she is mandated by Section 33 to “establish and maintain a principal place of business and such other branch offices as may be necessary.” It may be a simple home office or a fancy corporate office in a commercial/business district, the law does not specify. What is important is that as professionals we have a respectable place where we can conduct official business. Section 33 further mandates the conspicuous display of the original and/or certified true copies of the practitioner’s certificate of registration as well as the certificates of registration of all real estate service practitioners employed in such office.

    In addition, Section 38 requires real estate service practitioners to indicate the certificate of registration, professional identification card, privilege tax receipt (PTR) number and the Accredited Professional Organization (APO) receipt number, and the date of issuance and duration of validity on the documents he/she signs, uses or issues in connection with the practice of his/her profession.

    These requirements are very much similar to the ones lawyers are required to indicate when affixing their signatures in all pleadings to be submitted to the court. The Certificate of Registration is our Roll of Attorney Number; the APO receipt number is our Integrated Bar of the Philippines (IBP) receipt number. I guess this is to be expected when a majority of our current legislators in both Houses of Congress are lawyers.

    RESA also provides the supervision of real estate salespersons. Under Section 3 (g) (5), they are duly accredited natural persons who perform service for, and in behalf of real estate brokers who are 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. That is their legal definition according to RA 9646.

    But for licensed real estate brokers, they are the extra pair of eyes, ears and brain that assists in broadening the network of the broker and getting more things done in usually half the time. In the world of Robert Kiyosaki, author of the famous book Rich Dad, Poor Dad, that is called leverage. It is the ability to do more with less. Your real estate salesperson is your leverage.

    The real estate salesperson is under the direct supervision and accountability of a real estate broker. As such, a salesperson cannot by himself/herself “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.” Neither can he or she, “directly or indirectly, 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.” (Section 31, RA 9646)

    No examination is necessary for real estate salespersons to be accredited by the Board. However, Section 31 provides further that they must “have completed at least two (2) years of college and have undergone training and seminars in real estate brokerage, as may be required by the Board.” In addition, a salesperson cannot “receive or demand a fee, commission or compensation of any kind from any person” except from the duly licensed broker who has direct control and supervision over him/her “for any service rendered or work done by such salesperson in any real estate transaction.”

    Section 31 also provides that “a real estate broker shall be guilty of violating this Act 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.” However, the same section also states that “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.”

    What does this mean to me as a professional? As a licensed and registered real estate broker I must abide by the dictates of the law. I must make it a point to cause the accreditation of all my salespersons that have helped me find properties or listings, clients and close deals. Having one, a few or a team of accredited salespersons helps me project an image of being a consummate professional. This requirement also assures my clients and the public in general that I am surrounded by highly competent people who are likewise responsible and respected. 

    RESA also regulates the corporate practice of the real estate service. How? Under Section 32 (a), “no partnership or corporation 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 duly registered and licensed real estate brokers, appraisers or consultants, as the case may be.” Furthermore, these juridical entities are required to “regularly submit a list of its real estate service practitioners to the Commission and to the SEC as part of its annual reportorial requirements.”

    Most important for these partnerships and corporations, RESA requires that “there shall at least be one (1) real estate broker for every twenty (20) accredited salesperson.” The ratio of 1:20 seems adequate for the purpose of creating a high level of professionalism among the ranks of the employed real estate service practitioners in big brokerage companies.

    In the same spirit of creating a high level of professionalism, paragraph (b) of Section 32 requires that “divisions or departments of partnerships or corporations engaged 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.” Similarly, the “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 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 resignation or termination.

    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 juridical entity, subject to the provisions of the Labor Code.

    You may say that these provisions are very strict to the point of being burdensome. But the lawmakers may have felt that such strict requirements are what are needed to create a “corps of technically competent, responsible and respected professional real estate practitioners whose standards of practice and service shall be globally competitive and will promote the growth of the real estate industry.” (Section 2, RA 9646)

    Finally, RESA not only regulates the private practice and corporate practice of real estate service practitioners but also regulates and supervises real estate service practitioners in the public sector. Section 30 provides that “within three (3) years from the effectivity of this Act, all existing and new positions in the national and local governments, whether career, permanent, temporary or contractual, and primarily requiring the services of any real estate service practitioner, shall be filled only by registered and licensed real estate service practitioners.”

    “Assessors and appraisers, who on the effectivity of this Act, 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” are likewise considered as “qualified applicant for registration without examination”. As such the assessors and appraisers in this category “shall file their application within two (2) years from the effectivity of this Act.”

    What has been discussed so far are the provisions that are operational despite the absence of the IRR to fully implement all the provisions of RA 9646. In Part II of this essay, we shall discuss the rest of the provisions that are affected by the lack of the IRR at this time and how we can contribute to the drafting of the IRR of RESA.

     


    [1] The Philippine Association of REALTORS® Board (PAREB) was organized in 1960. It is the pioneer real estate organization in the Philippines with about 3,000 regular members and fifty 50 local constituent member boards nationwide. PAREB members are licensed real estate brokers authorized to use the patented designation REALTOR®.