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Category: Real Estate in the Philippines

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

  • Rep. Act No. 12216: Game Changer for Socialized and Low-cost Housing?

    “Housing is absolutely essential to human flourishing. Without stable shelter, it all falls apart.”

    – Matthew Desmond, Sociologist & Professor in Princeton University

    (Part 1 of 2)

    By Realttorney®

    The Philippine socialized and low-cost housing landscape is set for a significant shift with the passage of the “National Housing Authority Act” (Rep. Act No. 12216). This landmark legislation repeals Presidential Decree No. 757 and serves as the new charter for the National Housing Authority (NHA), the primary national government agency engaged in direct housing production.

    The Act aims to ensure a continuing and sustainable program for urban land reform and housing, making affordable and decent housing available to underprivileged and homeless citizens. The passage of this new law is a critical step towards addressing the nation’s enduring housing backlog, now estimated at around 6.5 million units.

    For real estate professionals charting the course in this evolving sector, and for potential homebuyers navigating their options, a thorough understanding of RA 12216 is indispensable. This Act brings forth significant changes – some empowering, others presenting new challenges. Let’s explore its key provisions and critically analyze its potential impact.

    Let us now delve into its key provisions and critically assess its potential impact on various stakeholders.

    📖 Eight Pillars: Key Provisions Strengthening the NHA

    This Act lays down several crucial provisions designed to enhance the NHA’s capacity and effectiveness:

    ✅ Renewed Mandate with Built-in Accountability [Sections 4 & 25]

    The NHA shall continue to exist and operate under this new Act for another twenty-five (25) years, commencing July 31, 2025. This term is subject to a mandatory review every five (5) years by the Department of Human Settlements and Urban Development (DHSUD), Commission on Audit (COA), and the Governance Commission for GOCCs (GCG). This review will evaluate performance and organizational structure, potentially recommending reorganization, consolidation, or even abolition.

    This extension is fundamental. The 25-year term provides a substantial horizon for strategic planning and program implementation. However, the 5-year mandatory review introduces a critical layer of accountability. It provides the NHA with the long-term stability essential for planning, implementing, and sustaining multi-decade housing strategies. For real estate professionals, this signals a more consistent government presence in the socialized housing sector, potentially leading to more predictable long-term partnerships and development frameworks. It could also mean a more adaptive and performance-driven NHA.

    For homebuyers in NHA’s target demographic, it offers the prospect that NHA’s programs will be regularly assessed for effectiveness, using indicators like housing production, occupancy rates, collection efficiency, and beneficiary feedback. This mechanism aims to ensure the NHA remains responsive to the evolving housing needs and maintains public trust.

    ✅ Boosted Financial Foundation: Increased Capitalization [Section 5]

    The authorized capitalization of the NHA is significantly increased from Five billion pesos (P5,000,000,000) to Ten billion pesos (P10,000,000,000), to be fully subscribed and paid by the Republic of the Philippines.

    This doubling of authorized capital provides the NHA with a more robust financial base to undertake larger-scale housing projects and programs. This increased financial capacity is crucial for addressing the substantial housing backlog and could translate into more housing units developed and more families served. For the real estate sector, a financially stronger NHA could be a more reliable partner in potential (though now differently incentivized) joint ventures and a more significant player in land development for socialized housing.

    ✅ Comprehensive Community Development and Enhanced Housing Operations [Section 6 III]

    The NHA is mandated to develop and implement comprehensive housing programs, including upgrading informal settlements, producing shelters for the underprivileged (with grants and socialized housing), resettling informal shelter families (ISFs) from danger areas and infrastructure projects, and providing housing for low-income government employees. A key aspect is undertaking housing development through joint ventures or Public-Private Partnerships (PPPs) to ensure sustainable livelihood programs, job opportunities, and the construction of basic community facilities and utilities (power, water, ICT). The Act also emphasizes strengthening the participation of affected families from social preparation to resettlement and making housing plans publicly available for comment.

    With this new task of the NHA, a closer coordination on creating policies and strategic plans or roadmaps for creating human settlements with the Department of Human Settlements and Urban Development (DHSUD) is called for, in line with the latter’s mandate pursuant to Rep. Act No. 11201.

    This marks a crucial philosophical shift from merely constructing housing units to creating integrated and sustainable communities. The explicit inclusion of ICT utilities recognizes modern necessities. Also, the strengthened mandate for family participation and public consultation can lead to more responsive and successful projects.

    For real estate developers, the specific mention of PPPs under Rep. Act No. 11966 (the PPP Code) provides a clearer framework for collaboration, though the incentive landscape has shifted. In addition, real estate developers partnering with NHA could mean incorporating spaces for micro-enterprises or training centers into project designs to ensure the implementation of sustainable livelihood programs for the housing community.

    For residents, it promises not just a home, but an environment conducive to improving their quality of life and economic prospects. The success of this provision will hinge on the NHA’s ability to effectively coordinate with other government agencies and the private sector to deliver these livelihood and community facility components, ensuring they are genuinely responsive to the needs of all their stakeholders.

    ✅ Strategic Asset Management and New Enforcement Powers [Sec. 6.II.d; Sec. 6.IV.d; Sec. 6.IV.f]

    The Act empowers the NHA with new and refined tools for asset management. This includes:

    🛂Establishing a socialized and low-cost housing loan restructuring and condonation program for delinquent but deserving beneficiaries, with clear exclusion criteria.

    🛂The power to summarily eject and dismantle illegal occupants from its properties and resettlement projects, without a judicial order, after proper notice.

    🛂The authority to engage in landbanking by acquiring lands in strategic locations, particularly near transit hubs, for socialized housing development.

    The loan restructuring and condonation program offers a lifeline to beneficiaries facing financial hardship, promoting housing retention. But it has its inherent dangers and may be prone to abuse. Meanwhile, the summary ejectment power is a potent tool for NHA to manage its housing stock and ensure units go to rightful awardees, though its implementation will require careful adherence to due process to protect rights.

    ✅ Formalized and Strengthened Disaster Response [Sec. 13]

    A dedicated Disaster and Emergency Response Housing Office (DERHO) is established under the Authority. This office will formulate and implement plans and programs for families displaced by natural and human-induced disasters, using sustainable, integrated, and community-based approaches in coordination with LGUs, as well as the National Disaster and Risk Reduction and Management Council.

    The creation of DERHO institutionalizes NHA’s role in disaster response housing, moving beyond ad-hoc interventions. This specialized office should lead to more efficient, effective, and timely shelter assistance for calamity victims. For real estate professionals involved in disaster rebuilding or supply chains for emergency shelter, DERHO will likely be a key coordinating body. This also aligns with the narrowed “agency” role for NHA in disposing of lands specifically for calamity victims.

    ✅ Focused Tax Exemptions for NHA’s Direct Operations [Sec. 14]

    The Authority, its assets, properties, and all accruals and income or investment earning therefrom, as well as supplies, equipment and documents, are exempt from any tax, assessment, charge and fee or customs or import duty of any kind, whether imposed by local or national entities (e.g., real property tax, VAT, donor’s tax, and regulatory fees like building permit and ECC fees, etc.)

    More importantly, “[t]he Authority shall be exempt from the payment of documentary stamp tax and registration fees, including fees required for the issuance of transfer certificates of titles”.

    These extensive tax exemptions have the potential to dramatically reduce the cost of socialized housing projects. For real estate developers, this makes partnering with NHA on such projects significantly more attractive, as reduced costs can improve project viability and potentially allow for lower selling prices or improved amenities.

    Clear and unambiguous implementing rules and regulations (IRRs) will be vital. For homebuyers, these savings should ideally translate into more affordable housing units, though the direct extent of pass-through savings will need monitoring.

    ✅ Unlocking Land: Streamlined Acquisition, Conversion, and Management [Sec. 15]

    Under Rep. Act No. 12216, lands identified for housing will be assessed and, if feasible, transferred to the NHA for administration. Critically, “[t]he conversion and reclassification of lands for housing projects shall be without prejudice to the rights of the beneficiaries under Republic Act No. 6657, as amended”. The Authority must also consider access to basic services, transport, and economic opportunities in land selection.

    The “conversion or reclassification” of lands for housing projects is provided, subject to the rights of agrarian reform beneficiaries, and addresses one of the most significant delays in housing production. This provision aims to cut through the bureaucratic red tape associated with land use conversion. However, its implementation will require careful coordination with Local Government Units (LGUs) and their existing Comprehensive Land Use Plans (CLUPs) to avoid conflict and ensure integrated urban development.

    The mandate to select sites with “proximity to economic opportunities” is a welcome directive, preventing the development of isolated communities far from jobs and essential services, a common pitfall in past resettlement projects.

    Finally, this provision of the law is harmonized with the provisions of Rep. Act No. 7279, as amended, also known as the Urban Development and Housing Act of 1992. This decades-old law aims to provide a comprehensive and continuing urban development and housing program. Its primary thrust is to uplift the conditions of underprivileged and homeless citizens by ensuring access to decent housing at affordable costs, along with basic services and employment opportunities.

    Rep. Act No. 7279 or UDHA also promotes the rational use and development of urban land, ensuring equitable utilization of residential areas while optimizing land productivity. It seeks to reduce urban dysfunctions, improve local government capabilities in housing programs, and encourage effective public participation in urban development. Additionally, it establishes a balanced housing development program, requiring developers to allocate a portion of their real estate development projects for socialized housing, ideally.

    We will write about a deeper analysis and other legal implications of the interaction of these two laws – Rep. Act No. 7279, as amended, vis-à-vis Rep. Act No. 12216, in another article in the future.

    ✅ Strengthened Governance and Operational Modernization [Sec. 7 & Sec. 22]

    Under Rep. Act No. 12216, the NHA Board is reconstituted to nine (9) members, chaired by the DHSUD Secretary and including key Department Secretaries, the NHA General Manager, and two (2) expert panel members in housing, urban planning, and development appointed by the President from a GCG shortlist. The inclusion of expert panel members is a significant step towards ensuring technically sound and independent perspectives in NHA’s governance and potentially reducing the politicization of the NHA Board.

    Their “recognized probity and independence” and professional experience should contribute to more technically sound, evidence-based, and innovative housing policies and program designs. This could lead to better quality, more sustainable, and more contextually appropriate housing solutions, benefiting both the industry and the homebuyers.

    Moreover, the Act mandates the NHA to establish and maintain, within one year, operational systems for debt collection, integrated IT and database management (census, lot awards, beneficiary profiling, financial management), and internal controls. The mandate for modernizing operational systems is long overdue and vital for improving efficiency, transparency, data-driven decision-making, and service delivery.

    Finally, for real estate professionals dealing with NHA, these improvements could translate to more streamlined processes and reliable information in the long run. Understanding this new law could mean a more identifiable and streamlined process for proposals involving government land for socialized housing. The speed and transparency with which the NHA and DHSUD, in coordination with LGUs, identify, evaluate, and dispose of these lands will be critical to achieving the intended acceleration of housing development.

    These are the eight (8) pillars that, in our opinion, will propel the NHA to better serve its stakeholders. What do you think will be the major impact of Rep. Act No. 12216 on the socialized and low-cost housing segment of the Philippine real estate industry? Type your comments below and let’s start a conversation.

    ——-

    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.

  • How the Ease of Paying Taxes Act Will Revolutionize Real Estate in the Philippines

    “Taxes are the price we pay for a civilized society.”

    – Oliver Wendell Holmes, Jr., Associate Justice of the US Supreme Court

    By Realttorney®

    Let’s face it: taxes have always been the ghost in the room during any property transaction in the Philippines. Whether you’re a developer breaking ground on a new residential enclave, a broker juggling multiple listings, or an heir trying to settle a family estate, tax compliance has often felt like navigating a maze – at times confusing, bureaucratic, and painfully slow.

    But all that may be about to change.

    Last January 2024, Pres. Marcos, Jr. signed into law Republic Act No. 11976, also known as the “Ease of Paying Taxes Act.” It aims to streamline tax administration, making it easier for real estate buyers, sellers, and owners to comply with their obligations. But Rep. Act No. 11976 does not directly address real estate taxation. Instead, it focuses on simplifying the administration of income and estate taxes, which can indirectly impact real estate transactions.

    This article dives into the key features of Rep. Act No. 11976, by highlighting how it benefits various taxpayers and stakeholders in the real estate industry, especially after the BIR released seven (7) Revenue Regulations in the last week of April 2024.

    Streamlined Tax Administration and Tax Compliance:

    One of the most significant benefits of Rep. Act No. 11976 is the emphasis on better and efficient tax administration. To operationalize this, Revenue Regulation No. 8-2024 was issued, which classified taxpayers into four categories:

    1. Micro Taxpayers – those with gross sales of less than P3 million for a taxable year;
    1. Small Taxpayers – those with gross sales of between P3 million to less than P20 million for a taxable year;
    1. Medium Taxpayers – those with gross sales of between P20 million to less than P1 billion for a taxable year; and
    1. Large Taxpayers – those with gross sales of P1 billion and above for a taxable year.

    To be clear, gross sales refer to total sales revenue, net of VAT, if applicable, during the taxable year, without any other deduction. Furthermore, gross sales shall only cover business income, excluding compensation income earned under an employer-employee relationship, passive income under Sections 24[1], 25[2], 27[3] and 28[4], and income excluded under Section 32 (B) of Rep. Act No. 8424, as amended.

    Hence, a mixed income earner (or a person with multiple income streams) will no longer agonize about being unwittingly categorized into a higher classification of taxpayer since the regulation clearly defines gross sales to include only business income.

    However, it should be noted that business income shall include income from the conduct of trade or business or the exercise of a profession. As such, RESPs must know these 4 categories listed above by heart.

    Kindly note that VAT-registered RESPs, business people, and juridical persons shall be automatically classified as Small Taxpayers. But, a taxpayer who will register to engage in business or practice a profession upon the effectivity of RR No. 8-2024 shall initially be classified based on the declaration in the Registration Forms beginning from the year they registered, and shall remain as such unless reclassified.

    Now the concerned taxpayer shall be reclassified in accordance with the threshold values indicated in the 4 items above. Taxpayers shall be duly notified by the BIR of their classification or reclassification, as may be applicable, in a manner or procedure to be prescribed in a revenue issuance to be issued separately.

    Finally, taxpayers registered in 2022 and prior years shall be classified based on their gross sales for the taxable year 2022. But, for taxpayers registered in 2022 and prior years without any submitted information on their gross sales for the taxable year 2022, including taxpayers registered in 2023 or in 2024 before the effectivity of RR No. 8-2024, shall initially be classified as Micro Taxpayer.

    These new classifications of taxpayers were made to encourage tax compliance on the part of all taxpayers in the Philippines.

    Streamlined Tax Filing and Payment

    The Act encourages the BIR to develop user-friendly online platforms for filing tax returns and paying taxes. This translates to:

    • Reduced Time and Cost: Imagine the convenience of filing tax returns electronically from the comfort of your office or home. This eliminates the need to travel to BIR offices and stand in queues, saving valuable time and resources. No more going to and queuing at Authorized Agent Banks (AABs) of different Revenue District Offices (RDOs) all over the country.
    • Fewer Errors: Online filing systems often come with built-in validation checks, minimizing the risk of errors in tax computations and filings.

    Improved Taxpayer Assistance by Modernizing the BIR Systems

    The Act emphasizes providing better taxpayer assistance. The BIR is mandated to perform the following:

    • Enhance taxpayer education: This could involve providing clear and accessible information on tax obligations specific to real estate transactions, such as capital gains tax for property sales or documentary stamp taxes, among others.
    • Establish a more responsive taxpayer hotline: A dedicated and accessible hotline can address taxpayer queries promptly, reducing confusion and frustration. It’s been more than one year since the law became effective. I am not so sure if the BIR has indeed established a more responsive hotline for taxpayers.

    Potential for Reduced Penalties and Interest

    The Act emphasizes fair treatment of taxpayers. While it doesn’t directly waive penalties and interest on late tax payments, it lays the groundwork for a more efficient system. With easier filing and clearer communication, the likelihood of unintentional tax delinquency might decrease. Additionally, the BIR may be more lenient with taxpayers who demonstrate a genuine effort to comply.

    All these reforms are not just superficial changes. It is a change in philosophy. The government is finally recognizing that one size does not fit all, especially in an industry as complex and as vital as real estate.

    Quid Nunc?

    So, what does this mean for you? Whether you own a condominium unit in BGC, manage real estate investments from overseas, or make your living closing deals and filing tax returns, here’s why Rep. Act No. 11976 matters – and how it might just be the best thing to happen to Philippine real estate in years.

    For Real Estate Developers: A Breath of Fresh Air

    If you’ve ever worked behind the scenes of a property development, you know that taxes can make or break project timelines. Filing monthly VAT returns, waiting endlessly for VAT refunds, if any are forthcoming, and managing the ever-changing interpretations of “business style” in official receipts have long been thorns in the side of real estate developers.

    Rep. Act No. 11976 changes the game by allowing developers (and real estate professionals) to:

    • File VAT returns quarterly instead of monthly—a huge administrative relief.
    • Get VAT refunds faster, thanks to a digitalized and standardized process.
    • Forget about “business style” descriptions on receipts, eliminating confusion and clerical inconsistencies.

    For Property Buyers and Property Owners: More Confidence, Less Complexity

    Buyers of real estate will benefit from the reduced transaction time under this relatively new law. The faster processing of the payment of the appropriate tax filing expedites the issuance of certificates authorizing registration and tax clearances, which is a very crucial document for real estate transactions. This can lead to quicker property transfers.

    Property owners – especially those selling land or receiving inherited properties – have traditionally relied on lawyers or licensed real estate brokers to help navigate the tax minefield. But this new law provides some much-needed breathing room.

    Here’s how:

    • Simplified Tax Compliance: The streamlined filing process can save property owners (sellers or heirs) valuable time and resources during property sales.
    • Reduced Compliance Burden: Clearer communication from the BIR can help sellers avoid unintentional tax errors and potential penalties.

    Imagine this: an 82-year-old widow in Quezon City, working to settle her late husband’s estate, no longer needs to deal with stacks of paper forms or wait in endless queues. With the help of a CPA or estate planner using accredited tax systems, her tax filings are secure and timely.

    Real Estate Owners (Landlords and Landladies): Stress-free Management

    • Easier Rental Income Reporting: Online filing systems can simplify the process of reporting rental income and paying income taxes.
    • Improved Access to Tax Information: Clearer and more accessible information from the BIR can help property owners understand their tax obligations related to rental income and property ownership.

    For OFWs and Foreign Investors: No More Flying Home Just to Pay Taxes

    If you’re a Filipino-American, an overseas worker, or a foreign investor who owns land or property in the Philippines, this law is music to your ears. Why? It should be emphasized that all taxes can now be filed and paid online. You have direct control over how you pay and when to pay your taxes.

    Better still, the BIR now recognizes tax service providers who can file the appropriate returns on your behalf, and these filings are considered official.

    That means you don’t need to fly back just to settle capital gains tax or sign estate tax documents. A well-trusted tax lawyer or CPA can now take care of this with full legal effect. With real-time access to filings and BIR receipts, managing a Philippine property portfolio abroad just became more viable.

    For Brokers and Real Estate Professionals: Clarity and Control

    Real estate brokers, listen up. This law could be one of the best tools you didn’t know you needed. Why?

    Historically, brokers have struggled with unclear tax obligations. Are you subject to VAT or percentage tax? Are you filing too much, too often? Worse, issuing a receipt with a mismatched “business style” could trigger an audit.

    What’s better now:

    • The law removes the need to state “business style”, which often caused mismatches between BIR records and what’s written on paper.
    • It clearly classifies taxpayers into micro, small, medium, and large, so brokers with modest earnings aren’t lumped into the same compliance group as corporations.
    • Online filing is now standard, making it easier to comply, even if you live or work in provinces where tax offices are limited.

    Let’s not forget the countless real estate brokers in the past who were penalized for minor infractions in receipts or due to confusion in VAT versus percentage tax requirements. Those days are long gone.

    What to Watch Out For: Implementation Hiccups

    While Rep. Act No. 11976 holds promise for a more taxpayer-friendly environment, its full impact will depend on the BIR’s implementation. Let’s not pretend this will be perfect after more than a year since the effectivity of this law. There are still challenges. And the success of the Act hinges on several factors.

    First, the BIR’s digital infrastructure must catch up quickly. User-friendly online platforms for filing and payment are crucial for achieving the intended benefits. Nationwide implementation requires investment and training for all BIR personnel.

    Second, many tax professionals and real estate service practitioners need retraining to adapt to new systems and classifications.

    Third, aside from professionals, educating taxpayers about their obligations and the new system is vital for ensuring smooth adoption.

    So, while the law is promising, vigilance is still the name of the game. So here are some practical advice for real estate stakeholders – whether you’re a developer, RESP, investor, or heir, here’s what you can do today to benefit from this landmark law:

    1. Review your tax filings and registration. Know what category you fall under.
    1. Update your invoice and receipt formats. Remove “business style” fields and comply with new standards.
    1. Go digital. Sign up for BIR’s eFPS and consult with accredited service providers.
    1. Ask for help. Engage a lawyer-CPA who understands both tax law and real estate. It’s worth it.

    In Closing: A Quiet Revolution for a Complex Industry

    The Ease of Paying Taxes Act isn’t just about cutting red tape. It’s about trust in a system that no longer sees taxpayers as adversaries, but as partners. And in the world of real estate, where fortunes rise and fall on timing, transparency, and compliance, this law may just be the quiet revolution we’ve been waiting for.

    So, the next time you close a sale, inherit a parcel of land, or get ready to invest in property, take comfort in knowing that the system behind the scenes is finally catching up with you, and for you.

    Rep. Act No. 11976 is not just a law. It’s a signal that things in Philippine real estate are about to get a lot easier – and a whole lot smarter. The law represents a positive step towards simplifying tax compliance in the Philippines.

    If you are a real estate service professional, you can play a vital role in disseminating information about the Act’s benefits to your clients. By understanding these changes, real estate buyers, sellers, and owners can navigate the tax landscape with greater ease and confidence. Remember, consulting with a tax advisor is always recommended for specific tax situations related to real estate transactions.

    Share your thoughts by leaving your comments in the comments section, and let’s start a conversation.

    ——-

    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.

    [1] On Interests, Royalties, Prizes, and Other Winnings, and Cash and/or Property Dividends of Individual Citizens.

    [2] On Prizes amounting to PhP 10,000.00 or less; and royalties on books as well as other literary works, and royalties on musical compositions of an Individual Resident Alien.

    [3] On Interest from Deposits and Yield or any other Monetary Benefit from Deposit Substitutes and from Trust Funds and Similar Arrangements, and Royalties; and Tax on Income Derived under the Expanded Foreign Currency Deposit System of Domestic Corporations.

    [4] Tax on Resident and Non-Resident Foreign Corporations.

  • Leveraging the One Person Corporation: A Game-Changer for Estate Planning in the Philippines?

    “A tax-free transfer of real properties to a One Person Corporation merits further study especially when there are several parcels of land to transfer that is meant to be preserved by the heirs or controlled by family for generations to come.”

    – Ernesto C. Perez II, CTEP®, Real Estate & Estate Planning Attorney

    By Realttorney®

    In an era where entrepreneurship is thriving and business structures are evolving, the concept of a One-Person Corporation (OPC) has gained prominence. Introduced under the Revised Corporation Code of the Philippines, the OPC offers unique opportunities for individuals looking to establish a single-owner corporation.

    In this article, we delve into the basics of an OPC, explore its advantages and disadvantages compared to an ordinary stock corporation, and examine the implications of the single stockholder’s demise. In addition, we shall explore the benefits of utilizing an OPC to hold various real properties, highlighting how it can effectively save estate taxes and avoid probate.

    What is a One-Person Corporation?

    A One-Person Corporation is a type of corporation where a single individual can establish and operate a business as a separate legal entity. Unlike a traditional stock corporation that requires a minimum of five shareholders, an OPC enables sole entrepreneurs to enjoy the benefits of limited liability protection and corporate structure without the need for additional shareholders. The OPC structure is governed by the rules and regulations outlined in the Revised Corporation Code of the Philippines.

    Advantages of a One-Person Corporation

    Limited Liability Protection: One of the key advantages of an OPC is the limited liability protection it offers to the sole owner. By establishing a separate legal entity, the personal assets of the owner are shielded from liabilities arising from the corporation’s activities. Therefore, in the event of lawsuits, creditors’ claims, or other unforeseen circumstances, the real properties held by the OPC are protected, safeguarding the individual’s or family’s wealth and ensuring financial security.

    Simplified Management and Decision-Making: Unlike an ordinary stock corporation that requires multiple shareholders and a board of directors, an OPC places decision-making authority solely in the hands of the single stockholder. This streamlined management structure allows for quicker and more efficient decision-making, as well as increased flexibility and control over business operations.

    Greater Privacy and Confidentiality: With an OPC, the single stockholder can maintain a greater degree of privacy and confidentiality compared to a stock corporation. As the sole owner, there is no need to disclose personal information or financial details related to other shareholders. This confidentiality can be advantageous for individuals who value privacy or operate in sensitive industries.

    Consolidation and Management of Real Properties: The OPC allows a single individual to establish a corporation, thereby enabling the consolidation of diverse real properties under one legal entity. This feature is particularly advantageous for families with multiple real estate holdings, as it facilitates centralized control and management. By transferring ownership of these properties to the OPC, families can streamline administrative processes, simplify financial reporting, and enhance asset protection.

    Disadvantages of a One-Person Corporation

    Limited Access to Capital: Since an OPC is owned by a single individual, raising capital can be more challenging compared to a stock corporation with multiple shareholders. Access to financing options such as equity investments or loans may be limited. However, this disadvantage can be mitigated by the owner’s personal financial resources or alternative sources of funding.

    Potential for Personal Liability: Although an OPC provides limited liability protection, there are situations where the single stockholder’s personal assets could be at risk. If the owner engages in fraudulent activities, commingles personal and business funds, or fails to observe corporate formalities, courts may “pierce the corporate veil” and hold the individual personally liable for the corporation’s obligations.

    Succession Considerations for One Person Corporations

    When the single stockholder of an OPC passes away, several scenarios may unfold:

    Transfer through Succession Planning: Prior to the stockholder’s demise, a well-designed succession plan can be implemented. The owner can designate a successor or beneficiaries who will inherit the shares and assume control of the OPC. This ensures the continuity of business operations and facilitates a seamless transition of ownership.

    Transfer through Intestate Succession: If the stockholder does not have a valid will or succession plan in place, the shares and assets of the OPC will be transferred according to the laws of intestate succession. The process may involve court proceedings and the appointment of an administrator to oversee the distribution of assets to the legal heirs.

    Flexibility in Succession Planning: Estate planning is a critical consideration for individuals seeking to ensure the seamless transfer of assets to their heirs while minimizing the impact of taxes and probate. The OPC structure provides considerable flexibility in succession planning, making it an attractive tool for families with substantial real estate holdings. Through shareholding arrangements, the founder can easily transfer ownership of the OPC to family members or chosen beneficiaries while retaining control during their lifetime.

    Estate Tax Efficiency: The use of an OPC as an estate planning tool can significantly reduce the burden of estate taxes. Under the Philippine Tax Code, the transfer of shares in a corporation through inheritance or bequest is subject to a lower tax rate compared to the transfer of real properties. By transferring ownership of real properties to the OPC, the founder can subsequently transfer the shares to the heirs, minimizing the estate tax liability. This strategy effectively capitalizes on the favorable tax treatment of corporate share transfers, resulting in substantial tax savings.

    Probate Avoidance: Probate is a legal process that validates a will and facilitates the distribution of assets to the rightful heirs. However, probate proceedings can be time-consuming, costly, and potentially contentious. By holding real properties within an OPC, these assets are not subject to probate. Instead, the transfer of shares can be carried out through a simple and efficient process, bypassing the complexities and delays associated with probate. This allows for a smoother transition of ownership and ensures that the family’s real properties remain accessible and functional without disruption.

    Conversion to a Stock Corporation: In certain cases, the OPC may be converted into an ordinary stock corporation upon the stockholder’s death. This conversion allows for the admission of new shareholders, enabling the business to continue with a broader ownership base. The conversion process would involve compliance with the necessary legal requirements and filing the appropriate documents with the relevant government agencies.

    Dissolution of the OPC: If there are no successors or heirs willing or eligible to take over the OPC, the corporation may be dissolved. The assets of the OPC would then be liquidated, and the proceeds would be distributed according to the provisions of the Revised Corporation Code and other applicable laws.

    Conclusion

    The advent of the One Person Corporation has opened up new possibilities for entrepreneurs seeking to establish a business as a separate legal entity with limited liability protection. The OPC offers advantages such as streamlined decision-making, enhanced privacy, and simplified management. However, potential challenges include limited access to capital and the risk of personal liability if corporate formalities are not followed.

    Be that as it may, the One Person Corporation (OPC) has gained notoriety among a wide range of Filipinos, not just entrepreneurs. This innovative legal framework also offers significant advantages for individuals seeking to consolidate and manage their family’s real properties, while also serving as a strategic estate planning tool.

    When it comes to succession planning, the single stockholder of an OPC must consider the future of the corporation upon their passing. By implementing a well-thought-out succession plan, the owner can ensure a smooth transition of ownership and the continued operation of the business. Alternatively, the conversion to a stock corporation or the dissolution of the OPC may be appropriate depending on the specific circumstances.

    Likewise, the One Person Corporation has brought about significant benefits for individuals seeking to consolidate and manage their family’s real properties. Additionally, it offers a unique opportunity to strategically utilize the OPC as an effective estate planning tool, allowing families to save on estate taxes and avoid probate. By taking advantage of the OPC structure, families can achieve enhanced asset protection, centralized management, and seamless succession planning while optimizing tax efficiency. As always, it is recommended to consult with legal and financial professionals to tailor these strategies to individual circumstances and ensure compliance with relevant laws and regulations.

    As with any legal and financial matters, it is essential for individuals considering the establishment of a One Person Corporation or implementing succession and estate plans to seek advice from qualified professionals who can provide guidance tailored to their specific needs and circumstances. By doing so, entrepreneurs can maximize the benefits of an OPC while effectively addressing potential challenges and ensuring a secure future for their businesses and the well-being of their families.

    ——-

    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 a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.

  • From Forebears to Heirs: Bequeathing Property in the Philippines

    “…but in this world, nothing can be said to be certain, except death and taxes.”

    – Benjamin Franklin, in a letter to Jean-Baptiste Leroy, 1789

    By Realttorney®

    This article was written for Filipino-Americans and other Filipinos who are dual citizens and have inheritance in the Philippines from deceased relatives. It is also for Filipino-Americans or non-resident Filipinos who own real estate in the Philippines. This is your guide to heirs, wills or no wills, and estate taxes in the Philippines.

    So, let us begin.

    Whether you own one or several real estates, or have an inheritance here in the Philippines, you’ve probably thought about what will happen to the parcel of land, house, or condominium unit when you or your close relative passes away. How can you secure your rights to the inheritance? How can you make sure that your properties in the Philippines end up in the right hands, without creating family conflict and needless litigation?

    In all parts of the world, transferring real estate to the heirs of property owners is not as simple as writing their names on a piece of paper. There’s a legal process, documentary requirements need to be prepared, and yes, estate taxes must be paid before you or your loved ones can truly claim ownership.

    Now let us start to detail everything you need to know about how to pass on property in the Philippines from the registered owner, especially if you’re living abroad. Whether you’re an heir who is a co-owner of properties in the motherland or a property owner planning for the inevitable, this guide will walk you through the process, clearly and confidently.

    🧬 Who Can Inherit Property in the Philippines?

    Let’s learn the basics first: Under Philippine law, real estate can pass to a select few, if the decedent passed away with or without a will.

    ✅ Compulsory Heirs Include: (1) Your legitimate children or descendants; (2) Your parents or ascendants, if you have no children; (3) In some cases, illegitimate children are also entitled; and (4) Your spouse.

    ✳️ These heirs are entitled to a “legitime”, a portion of your estate that the law reserves for them. You cannot freely dispose of this portion if a will has been executed by the testator. However, if you die without a will, your estate will be distributed based on intestate succession rules under the Civil Code. It is up to the property owner to make a last will and testament. But seek competent legal advice for this. And, if you get word that you have an inheritance from a relative in the Philippines, then you have to determine whether your relative passed with or without a will.

    🪪 Step-by-Step: Legal Process for Transferring Property to Heirs

    When a person passes away, the property does not automatically pass to the heirs. Here’s the process that must be followed:

    Step 1: Determine If There’s a Will.

    With a will (testate succession): The will must be probated in court. You need to contact the Executor of the will to determine what is to be bequeathed to you.

    Without a will (intestate succession): The estate will be divided among the legal heirs as per the provisions of the law on intestate succession – the default estate plan of the State in the Philippines.

    📌Note: Even if the will was executed abroad (e.g., in the U.S.), it must still be “probated” in a Philippine court if it involves property in the Philippines. The process involves the filing of a Petition for Recognition of Foreign Judgment in the trial court where the property is situated. The foreign judgment here is the Order of the Probate Court in the United States.

    Step 2: Prepare and Settle the Estate.

    What needs to be prepared? Before collating all the required documents for the processing of the settlement of the estate, whether via will or not, one must first identify all properties, both personal and/or real. Next is to determine the value of each property in the name of the registered owner.

    After this, if the estate is liquid, then paying the debts and liabilities of the deceased person is in order. However, if the estate is illiquid, then the heirs should agree to sell the property to pay for all the debts and liabilities that are outstanding.

    These steps will be hassle-free if all the heirs agree to be civil and amicably discuss anything and everything about settling the estate. However, disputes among the heirs are not uncommon, especially when the value of the estate is enormous, or there is an unresolved family issue from the past.

    When all heirs are in unison, they can execute an Extrajudicial Settlement of Estate to be used as the transferring document at the settlement of the estate before various government agencies in the Philippines. Collate the documents that are needed for submission to the Bureau of Internal Revenue, the Local Government Unit, and the Registry of Deeds.

    💡Tip: Engage an experienced estate attorney in the Philippines to guide you and avoid costly errors or delays.

    Step 3: Pay the Estate Tax.

    📉 In May 2025, I lectured on the settlement of estates (entitled “From Forebears to Heirs”), including the estate tax amnesty that was then still available. That amnesty expired on June 14, 2025. For estates settled now, the following points apply.

    1. The estate tax rate is 6% based on the value of the net estate.
    2. The standard deduction is PhP 5 million for citizens in the Philippines.
    3. The standard deduction for a non-resident not a citizen of the Philippines is PhP 500,000.00.
    4. The deduction on the market value of the decedent’s family home is now PhP 10 million.
    5. The Estate Tax Return (BIR Form 1801) should be filed within 1 year from the date of death. Any filing passed this period will merit penalties, surcharges, and interest on the estate tax due.
    6. The estate tax return showing a gross value exceeding PhP 5 million shall be supported with a statement duly certified by a CPA.
    7. Payment by installment shall be allowed within 2 years from the statutory date of its payment without civil penalty and interest.

    ✅ Kindly note that the share of the decedent in the Family Home is only half of the total allowable amount since he or she is merely a co-owner of the house and lot that is identified as a conjugal or community property. And, finally, if the net value of the estate is under PhP 5 million and you claim the full standard deduction, you may not owe any estate tax.

    Once the net estate has been determined based on the documentary requirements submitted to BIR, the payment of the estate tax is now in order at the Authorized Agent Banks (AABs) or the Revenue Collection Officer at the Revenue District Office (RDO).

    Step 4: Transfer Title to Heirs. Once the estate tax is paid and the documents submitted at the BIR, the Certificate Authorizing Registration (CAR) shall be forthwith issued. Along with the (1) CAR, you need to prepare these documents: (2) the original copy of the transferring document – will or EJS – that was processed by the BIR; (3) original owner’s duplicate copy of the Torrens title; (4) certified electronic copy of the existing land title; (5) certified true copy of the tax declarations; (6) tax clearance; (7) Heir’s Bond and (8) the valid IDs of all the heirs, among others.

    📌 These documents will be submitted to the Registry of Deeds in order to cancel the old land title and eventually issue a new Transfer of Certificate of Title. The registration fee for the transfer of the land title in the name of the new owner is the final expense that will be paid by the heirs.

    ⚠️ Only after this step can the property be legally owned by the heirs in the eyes of the Philippine government. Heirs cannot transfer, sell, or mortgage the property until the estate tax is paid.

    🔑 Options for the Settlement of Estate. There are two primary ways to settle an estate in the Philippines:

    1. Judicial Settlement. This is the option when there is a Last Will and Testament that was executed by the testator before his or her death. But, if there is no will and the Heirs are in conflict with each other, then there is no other option but to go to court to settle the dispute between the heirs.

    Finally, if one or more heirs is a minor and the property belonging to the estate will be sold to a prospective buyer, then the portion of the minor to be sold should be confirmed by the Family Court to make it legal and valid.

    The Court proceeds with the probate and oversees the distribution of the properties owned by the testator and the payment of all outstanding debts and liabilities to the creditors of the testator.

    2. Extrajudicial Settlement (EJS) of Estate. This option is often used when the deceased left no will. It should be noted that the execution of the EJS is not under any provision of the law on succession. It is based on the Law on Contracts.

    The EJS is a document where all the heirs of the deceased agree to adjudicate and partition among themselves the entire estate of the deceased relative. The heirs should be of legal age. But, if some are not of legal age or an incapacitated to sign a contract, then they should be adequately represented by an Attorney-in-Fact or a duly appointed Legal Guardian by a Family Court.

    This document should be notarized and must be published in a newspaper of general circulation once a week for 3 consecutive weeks. An Affidavit of Publication will be given at the end of 3 weeks of publication. Then this Affidavit should be submitted to the Registry of Deeds, as part of the documentary requirement for the transfer of the Torrens title to the names of the Heirs.

    💡 You can also opt to partition the estate via waiver of rights, donation, or sale among heirs simultaneously with the settlement of the estate of the deceased relative.

    📄 Important Documents You Need to Prepare

    Whether you’re in the U.S. or any country in the world, make sure to prepare the following for submission to the BIR:

    1. Death certificate (issued by PSA or foreign equivalent).
    2. Birth certificate (issued by PSA or foreign equivalent).
    3. Marriage certificate (issued by PSA or foreign equivalent).
    4. Deed of Extrajudicial Settlement or probate documents.
    5. Original owner’s duplicate copy of the land title (OCT/TCT/CCT).
    6. Tax Declaration from the local assessor’s office.
    7. Tax Clearance for the current year.
    8. Valid IDs of all heirs.

    The BIR Certificate Authorizing Registration (CAR) is the proof of estate tax payment and any other taxes paid as a result of the settlement of the estate of the deceased.

    🗺 What If the Heirs Are Overseas?

    If heirs are in the U.S. or any other country in the world, here are some tips:

    Sign SPAs abroad and have them authenticated by the Philippine Consulate, or an Apostille Certification has been issued by the foreign ministry of the host country, whichever is applicable.

    Coordinate with an experienced estate lawyer in the Philippines to process probate, tax filing, and title transfer.

    Ensure you have TINs (Tax Identification Numbers) issued by the BIR—required for all heirs, even if abroad.

    Consider setting up a family corporation or trust to manage the property, especially for large estates or multiple heirs. For complex estate planning issues, it is best to consult an estate planning professional in the Philippines. Apart from setting up a family corporation or trust, consider other Estate Planning Tools like life insurance that can help preserve wealth and reduce tax exposure.

    📣 Final Thoughts

    Transferring property to your heirs in the Philippines can be smooth and rewarding, but only if you plan ahead. As a Filipino-American or overseas Filipino, you’re already navigating two legal systems—so don’t leave it to chance.

    Get the documents ready, talk to a licensed estate lawyer, pay the necessary taxes, and, most importantly, make sure your wishes are clear and legally valid.

    That way, when the time comes, your loved ones can focus on remembering you, not struggling through bureaucracy.

    ——-

    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.

  • Building Smart Sustainable Communities: Key Legislative Updates in the Philippines

    “At the same time we’re solving for climate change, we’re going to be building cities for three billion people.”

    – Peter Calthrope, Architect & Urban Planner

    (Par 1 of 2)

    By Realttorney®

    Last April 4, 2025, I presented a topic during the CPD Event of the Real Estate Brokers Association of the Philippines (REBAP), entitled “Upcoming Legislation Impacting the Real Estate Industry in the Philippines.” I discussed the following: (1) Amendments to the REIT Act; (2) Tax on Non-Essential Goods; (3) Amendments to the Investors’ Lease Act; (4) the ARROW Act; and (5) the National Land Use Act.

    Since the presentation was only for two hours, I did not discuss two pending legislations at the Senate of the Philippines that echoed my presentation way back on July 8, 2023, during the 2nd National General Membership Meeting of REBAP in Tagaytay City. The Presentation was entitled, “Building Climate Resilient Human Settlements in the Philippines.”

    Here are the important features of Senate Bill No. 65 and Senate Bill No. 298, and how they align with the Smarter City Framework published by the Department of Science and Technology (DOST) in 2024.

    Senate Bill No. 65 (SBN 65) is authored by Senator Pia S. Cayetano. The short title of the bill is “Sustainable Cities and Communities Act”.

    It aims to provide for the development of sustainable cities and communities in the country. The bill seeks to fulfill international obligations concerning Sustainable Development Goal 11 (SDG 11), which is to “make cities and human settlements inclusive, safe, resilient and sustainable”. It also aims to address the problems caused by rapid urban growth, such as urban poverty, inequality, homelessness, and informal settlements.

    Policy Declaration: The State policy includes undertaking a program of urban land reform and housing to provide affordable, decent housing and basic services to underprivileged and homeless citizens. It also declares the policy to make cities safe and sustainable by ensuring access to safe and affordable housing and upgrading slum settlements. Furthermore, the State shall invest in public transport, create green public spaces, and improve urban planning and management in a way that is both participatory and inclusive.

    Model for Sustainable Cities and Communities: SBN 65 outlines elements that sustainable cities or communities should possess during their transition. These include:

        *   Affordable housing.

        *   Accessible healthcare services and facilities.

        *   Accessible social services for all, especially the vulnerable & disadvantaged.

        *   Child care facilities, youth centers, and centers for senior citizens.

        *   Efficient, accessible, and affordable public transport systems.

        *   Alternative eco-friendly transport means like walking, biking, scooters, etc.

        *   Safe, accessible, and enjoyable areas of open space.

        *   Preference for the use of renewable resources.

       *   Waste management systems with recycling.

        * Energy-efficient homes.

        *   Strong community linkages for peace and order.

        *   Access to sports and cultural activities.

    Indicators: According to SBN 65, the National Economic and Development Authority (NEDA) shall set targets based on indicators, taking into consideration SDG 11, to determine if a city or community has fully transitioned into a sustainable city or community. Examples of indicators include urban population living in slums, public transport access, sustainable urbanization rates, urban planning management with civil society participation, deaths and injuries from natural disasters, economic losses from natural disasters, solid waste management, urban air pollution, and integrated and local disaster risk management.

    Support and Incentives: The bill mandates the Department of Interior and Local Government (DILG) to provide necessary technical assistance and resource augmentation to Local Government Units (LGUs) to assist them in the transition. NEDA and other related agencies are also mandated to provide support and input. The DILG shall develop a grant or cash award incentive scheme for LGUs that achieve their annual targets set by NEDA. Finally, LGUs are authorized to enter into contracts and receive grants to support efforts towards building a Smart City.

    Meanwhile, Senate Bill No. 298 (SBN 98) is authored by Senator Alan Peter S. Cayetano. The title of this bill is “Smart Philippines Act”.

    Its purpose is to establish a framework for a Smart Philippines, ensuring accessible and affordable internet for all. The bill aims to fast-track efforts towards the development of smart cities and municipalities to secure the future of Filipinos through technology and innovation, and to ensure digital inclusion for every Filipino.

    Under SBN 298, the State recognizes science and technology as essential for national development and progress, prioritizing research, development, invention, innovation, and promoting smart technologies. It acknowledges the need for a “digital highway” for the digital economy. The State ensures all Filipinos have access to affordable, quality, and up-to-date information and communication technologies (ICTs), including reliable internet service, internet-enabled devices, online content, digital literacy training, technical support, and online privacy and cybersecurity.

    Definition of Smart City/Municipality: A smart city or municipality is defined as a community where innovative, advanced, and trustworthy ICTs and related mechanisms are applied to: improve residents’ health and quality of life; increase efficiency and cost-effectiveness of civic operations; promote economic growth; and create a safer, more secure, sustainable, resilient, livable, and workable community. This involves gathering, analyzing, and communicating data from civic systems and infrastructure, making improvements based on data, coordinating with public and private entities (like utilities), and integrating measures for cybersecurity, privacy protection, impact measurement, and regional coordination.

    Definition of Digital Inclusion: This new concept is defined as activities necessary to ensure all individuals have the opportunity to interconnect through access to affordable ICTs, including reliable internet, suitable devices, and engaging online content. It also includes access to digital literacy training, quality technical support, and assurance of online privacy and cybersecurity.

    Another provision of SBN 298 that provides an added layer of bureaucracy is the creation of the Smart Philippines Council (SPC), which will be the overall policy-making and implementing body to monitor the implementation of the provisions of the proposed legislation. The SPC shall be composed of secretaries from key government agencies, including DICT (Chair), DILG (Co-Vice Chairperson), and DOST (Co-Vice Chairperson), along with other secretaries, LGU representatives, and private sector/academe representatives.

    Smart Philippines Initiative: The SPC shall create a five-year strategic action plan within six months upon the effectivity of the law, focusing on modernizing digital infrastructure, health, transportation, education, finance, and urban development. The initiative will prioritize activities such as identifying barriers to digital inclusion, studying subsidies for LGUs for broadband, studying broadband affordability, demonstrating scalable smart city technologies, encouraging data sharing and best practices, promoting industry standards and interoperability, promoting a skilled workforce and inclusion, fostering the smart city technology industry, encouraging adoption, and safeguarding cybersecurity and privacy. This initiative should complement existing DICT programs.

    Smart Philippines Pilot Program: The SPC will provide technical support and expertise to LGUs. A pilot program will be established to assist financially unable LGUs from different regions with funding for modernization programs.

    Smart Philippines Resource Guide: Based on the Initiative, the SPC will create a guide to assist LGUs in developing their own smart programs, which will be available online for free. It is worth noting that the City of General Trias in the Province of Cavite passed City Ordinance No. 21-11 (General) entitled “General Trial Smart City Digital Governance Program – Citizens Registration”. At least, we know of one LGU that is seriously considering the great benefits of establishing a smart city in its jurisdiction.

    Finally, the DICT, in coordination with DILG and DOST, is the primary agency responsible for implementation, ensuring mandates are fulfilled and cooperation or partnerships are established. A tall order, especially when you read that most of the provisions are motherhood statements that may have difficulties during the implementation, despite the fact of an initial funding of PhP 100 million from the National Government.

    Both Senate Bill No. 65 and Senate Bill No. 298 are broadly aligned with the DOST Framework for Smart Sustainable Communities and Cities. When read together, the overarching goal of both Senate Bills and the DOST Framework is the development of cities and communities that improve the quality of life for residents.

    The DOST Framework specifically uses the term “Smart Sustainable Communities and Cities”, integrating both concepts, similar to how SBN 65 focuses on sustainability and SBN 298 on “smartness”, which includes sustainability in its definition.

    Leveraging Technology. The DOST Framework promotes leveraging science, technology, and innovation and highlights smart city solutions and data infrastructure. SBN 298 is centered around establishing a framework for a “Smart Philippines” by applying innovative technologies, particularly ICTs, and emphasizing digital infrastructure and data utilization. While SBN 65 is more focused on social and environmental aspects of sustainability, the implementation of many of its goals (like improving public transport or waste management) can be significantly enhanced by smart technologies, which aligns with the DOST Framework’s approach.

    Data Importance. The DOST Framework strongly emphasizes the importance of data infrastructure, data integration, analysis, utilization for decision-making, and protection. SBN 298’s definition of a smart city also highlights gathering, analyzing, and using data and includes safeguarding privacy and data management as a priority, directly aligning with the DOST’s view of data as the “new ‘oil’”. SBN 65’s reliance on indicators also necessitates data collection and analysis.

    Multi-stakeholder Approach: The DOST Framework identifies the roles of LGUs, industries, SMEs, academe, and DOST in achieving smart and sustainable cities. To reiterate, SBN 298 creates the Smart Philippines Council comprising representatives from various government agencies, LGUs, the private sector, and academe, and explicitly mandates collaboration with public and private stakeholders. Meanwhile, SBN 65 involves national government agencies supporting LGUs.

    Key Sectors: The priority areas and themes covered in both bills largely overlap with those identified in the DOST Framework’s desired outcomes and indicators. Examples include:

    • Health and Living Recreation (DOST) aligns with Accessible Healthcare Services and Facilities (SBN 65) and Health Modernization (SBN 298).
    • Transportation and Mobility (DOST) aligns with Efficient, Accessible, and Affordable Public Transport and Alternative Means (SBN 65) and Transportation Modernization (SBN 298).
    • Environmental Quality (DOST) aligns with Waste Management, Renewable Resources (SBN 65), and Environmental resources – DENR is part of SPC (SBN 298).
    • Economic Opportunity (DOST) aligns with Economic Development (DOST desired outcome) and Finance modernization seen in SBN 298. While SBN 65 mentions employment opportunities.
    • Governance (DOST) aligns with Government Efficiency (DOST desired outcome) and Urban planning management (an SBN 65 indicator).
    • Safety, Security and Resilience (DOST) aligns with Strong Community Linkages for Peace and Order (SBN 65) and Public Safety (DOST desired outcome). SBN 65 indicators cover natural disasters and safe spaces. Meanwhile, SBN 298 includes creating a safer and more secure community as part of the smart city definition.
    • Urban Planning (DOST) aligns with improving urban planning and management (SBN 65) and Urban development modernization (SBN 298).
    • Education (DOST) aligns with Education modernization (SBN 298).

    Role of DOST: The DOST Framework is led by DOST-PCIEERD and DOST Regional Offices. SBN 298 explicitly includes the DOST Secretary as a Co-Vice Chairperson of the Smart Philippines Council and designates DOST as one of the key agencies coordinating the implementation of the Act. This inclusion indicates that SBN 298 is intended to align with and potentially build upon DOST’s efforts and expertise in science, technology, and innovation for smart cities. SBN 65 doesn’t explicitly mention DOST, but its reliance on NEDA and DILG for implementation could involve consultation with agencies like DOST that have relevant expertise.

    Framework Development: The DOST Framework serves as a guide. SBN 298 explicitly aims to establish a national framework (“Smart Philippines Framework”) and a strategic action plan (“Smart Philippines Initiative”), which aligns with the need for a structured approach implied by the DOST Framework.

    In summary, both Senate Bills align with the DOST Smarter City Framework by addressing the development of sustainable and/or smart cities and communities in the Philippines, emphasizing improved services, quality of life, and the involvement of multiple stakeholders. SBN 298 shows particularly strong alignment with the “Smart” aspects through its focus on technology, digital infrastructure, and data, and includes DOST in its governing body. SBN 65 strongly aligns with the “Sustainable” aspects and the integration of UN SDGs highlighted in the DOST Framework.

    They represent legislative efforts to create the policy and structural support necessary to realize the vision outlined in the DOST Framework.

    In the next part of the series, we will discuss the potential implications of these bills on the real estate industry, considering the benefits, challenges, and financial implications for various stakeholders. We shall also discuss whether these two bills are in alignment with the DOST Smarter Sustainable Communities and Cities Framework that was published in 2024.

    For now, tell us what you think about creating Smart Cities in the Philippines, and are you willing to live in one?

    ——-

    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.