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  • The 99-Year Lease Debate: Implications for Real Estate and Other Looming Risks

    (Part 2 of 2)

    By Realttorney®

    Despite the passage of the “99-Year Lease Law” on third and final reading by both Houses of Congress on December 24, 2024, there is a chance that it will not become law in the next 6 months. After the May 2025 elections, it seems our legislators may have no appetite to push for the harmonization of the 2 versions of the bill in the bicameral conference, and the subsequent ratification of the approved version by both chambers of the Congress of the Philippines.

    While the proposal to amend Republic Act No. 7652 to extend the lease term for foreign investors to 99 years aims to attract more foreign capital and boost economic growth, it has generated several arguments against its enactment into law. Let us discuss some of these criticisms here.

    This is an opportune time for all real estate stakeholders to learn about the various risks and challenges if the proposed amendments become law. And, by the end of the article, we shall discuss the key takeaways for real estate service practitioners as they practice and serve valued clients in their chosen profession.

    As discussed in the previous article, the proposed amendments to Rep. Act No. 7652 seem constitutionally sound. However, critics argue that a 99-year lease is practically equivalent to foreign ownership of land, which is prohibited under the Philippine Constitution to protect national patrimony. Cause-oriented groups fear this could create loopholes allowing foreigners and foreign-owned entities to gain excessive control over the country’s land and resources over an extended period.

    In addition, detractors of the “99-Year Lease Law” view this 99-year lease contract as a multi-generational lease, far exceeding the average global life expectancy. As such, this long duration raises concerns about the potential for foreigners and foreign-owned entities to establish long-lasting dominance over strategic lands all over the Philippines.

    Furthermore, the extended security over private lands provided to foreign investors may create an uneven competitive landscape. Local enterprises may face challenges competing with foreign investors who have greater incentives and long-term stability in land access. This imbalance could hinder the growth and success of local businesses in the real estate sector.

    Hence, while the extension of a lease up to an aggregate period of 99 years may bring opportunities for growth and development in the real estate market, it is crucial to carefully consider and address the potential challenges and risks associated with this incentive. Therefore, we should understand the risks and learn how to mitigate them so that the real estate sector can continue to thrive and contribute positively to the Philippine economy.

    What are the potential challenges facing the real estate sector if Rep. Act No. 7652 is successfully amended?

    One major concern is the reduced availability of private land for domestic use. Long-term leases effectively take land out of circulation for nearly a century, which could worsen the scarcity of prime land in urban and highly industrialized areas. This scarcity may drive up costs for local businesses and residents, impacting the overall economic landscape.

    The passage of this law will impact the housing market, especially the socialized, low-cost to mid-market housing projects, in a negative way. Apart from the issue of affordability of such housing units, the passage of the “99-Year Lease Law” will drastically affect the supply of such housing projects, thereby exacerbating the ability of government to provide decent and affordable housing units to the low-income Filipinos.

    In addition, there is apprehension that the extended lease terms could lead to increased land values, potentially displacing local investors or developers and making it harder for Filipinos to afford land and housing in their own country.

    What are the potential negative impacts on agriculture and the local communities tied to agriculture?

    Socio-civic organizations have raised concerns that agricultural lands awarded to agrarian reform beneficiaries (ARBs) could be targeted for long-term lease for 99 years by foreign investors or foreign-owned entities. If so, this will undermine the goals of land redistribution and, most importantly, food security.

    Therefore, this amendatory bill, if signed into law, could lead to the expansion of large-scale agribusinesses controlled by foreign corporations, to the detriment of small-scale farmers and other local food producers in the Philippines.

    Historically, the government’s Comprehensive Agrarian Reform Program (CARP) is designed to ensure the fair distribution of land to farmers and enhance agricultural productivity. The proposed amendments to the Investor’s Lease Act include provisions that require leases to adhere to agrarian reform laws.

    However, there are several concerns that need to be addressed. First, the detractors of the amendments see a potential risk that foreign investors may attempt to convert agricultural lands for industrial or commercial purposes. In their view, this could reduce the amount of land available for agrarian reform beneficiaries and jeopardize the long-term sustainability of the agricultural sector.

    But we have to remember that there are certain safeguards included in the amendments that would hopefully prevent these things from happening. If such eventualities happen, then it would not be the failure of the letter of the law and its implementing rules and regulations, but due to the weakness of the character of those implementing the agrarian reform law and the implementing agencies of the amendatory law.

    Second, and this is my opinion, enacting these amendments into law without the overall framework of a National Land Use Plan would present great regulatory challenges for the government regulators to manage and plan the use of land that is best for the Philippines, its regions, provinces, and cities.

    Without a comprehensive land use plan, each local government unit (LGU) will compete for the setting up of investment projects in their localities while sacrificing the need for human settlements, food production, and the protection of the environment and ancestral domains, if any, within their territorial jurisdiction.

    Monitoring and enforcing compliance of land use regulations of each LGU will be fragmented at best and may place a strain on government resources. Without effective oversight, there is a possibility of exploitation or non-compliance with the objectives of the Investor’s Lease Act, the laws on the environment, agrarian reform and other regulations.

    Furthermore, critics worry that the bill’s definition of “private lands” might be vague enough to include ancestral domains, putting these lands at risk of being leased to foreign investors and eroding the heritage and identity of indigenous communities. But of course, Rep. Act No. 8371 (the Indigenous Peoples’ Rights Act) will hopefully provide adequate protection and safeguards to the Indigenous Peoples’ Ancestral Domains.

    On a positive note, the proposed amendments to the Investor’s Lease Act could attract foreign investments in agro-industrial ventures. This could lead to increased employment opportunities for farmers and the introduction of modern agricultural technologies for the use of Filipino farmers.

    Thus, while the government’s land reform program has the potential to bring about positive changes in the agricultural sector, it is crucial to address the aforementioned concerns to ensure all stakeholders in the agricultural sector benefit from all foreign investments in agriculture and agro-industrial ventures.

    Economic Dependency and Lack of Real Impact: Some argue that such a long lease term could lead to economic dependence on foreign-owned entities, with control over significant land areas potentially shifting to foreign interests. Moreover, analysts suggest that the length of the land lease might not be the primary deterrent to foreign investment in the Philippines. Other factors like expensive power, poor infrastructure, governance issues, and graft and corruption might be more significant constraints. Therefore, extending the lease term alone might not guarantee a substantial increase in foreign investment or long-term economic development.

    What then are the key takeaways for Real Estate Service Practitioners?

    The proposed amendments to the Investor’s Lease Act could bring forth a myriad of challenges and opportunities for real estate service practitioners (RESPs) and real estate investors and developers.

    The first thing to keep in mind is the possible rise in demand for advisory services for RESPs. With lease terms being extended, foreign investors will seek expert guidance to navigate local laws and ensure the legality and sustainability of their lease agreements.

    Second, the increase in foreign direct investments in the Philippines may lead to an increase in demand for medium-scale or large-scale property development projects, opening doors for local partnerships and joint ventures for the clients of RESPs or the RESPs themselves.

    Third, the possible growing demand for real estate projects will necessitate that RESPs conduct thorough due diligence to guarantee that leased properties adhere to agrarian reform laws and local zoning ordinances, among others.

    Finally, it is imperative for RESPs to play a role in advocating for policies that strike a balance between protecting national interests and fostering economic growth. Ultimately, RESPs must be agents of positive change for all stakeholders in the real estate industry.

    RESPs must be prepared to adapt to the changes brought about by the forthcoming amendments to the Investor’s Lease Act and seize the opportunities it presents. By staying informed and proactive, RESPs can navigate the evolving landscape of the real estate industry with confidence and success.

    In conclusion, the proposed amendments to the Investor’s Lease Act demonstrate the government’s dedication to attracting foreign direct investments. While the proposed 99-year lease period is constitutionally acceptable, it is crucial to consider the potential drawbacks, such as impacts on land availability, the real estate market, and the land reform program, among others.

    To ensure that this policy achieves its objectives without compromising national interests, it is essential to establish robust safeguards, clear regulations, and transparent implementation by government officials. For professionals in the real estate industry, this development highlights the importance of staying informed and proactive in guiding clients through the changing legal landscape.

    Whether assisting foreign investors or safeguarding the rights of Filipino landowners, the real estate sector must serve as a conduit between opportunity and compliance. While proponents argue that a 99-year lease term will attract foreign investment and stimulate the economy, opponents voice significant concerns regarding national sovereignty, potential displacement of local communities, negative impacts on agriculture, questionable economic benefits, and potential legal complexities.

    The stakeholders in the real estate industry, especially RESPs, should urge Congress and the Executive Department to exercise caution and prioritize the long-term interests of Filipino citizens and national patrimony.

    Do you have anything to add? Or do you disagree with what we have written? Your comments will be very much welcomed.

    ——-

    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.

  • Essential Guide to Paying Professional Tax Annually

    “Professional is not a label you give yourself – it’s a description you hope others will apply to you.”

    – David Maister, Author and Former Harvard Business School Professor

    Sample Professional Tax Receipt (PTR) issued by a local government unit in the Philippines

    By Realttorney®

    Ti auguro un buon anno nuovo! It is the second day of the new year. For some, it is back to work. Others are still in vacation mode until Sunday, January 5 — which we Catholics in the Philippines celebrate as the Feast of the Epiphany. For the rest of the country, this coming Sunday is the final day of the Christmas season.

    Whether you are working now or still vacationing, a real estate service practitioner must be reminded of legal compliance that must be made at the beginning of every new year. Before the effectivity of the Ease of Paying Taxes Act, licensed real estate brokers and accredited real estate salespersons would visit the Bureau of Internal Revenue to pay the annual registration fee of Five Hundred Pesos, under BIR Form No. 0605. But that is no more today.

    In this article, we will focus on the payment of the professional fee to your Local Government Unit. What is it? Who pays it? And why do we need to pay an annual professional tax?

    Section 139 of Rep. Act No. 7160, otherwise known as the “Local Government Code of 1991”, provides the legal basis for provinces to impose and collect professional tax on each person engaged in the exercise or practice of his/her profession.

    Meanwhile, cities are also authorized to impose professional tax under Section 151 of the Local Government Code, which provides that a city may levy taxes, fees, and charges that a province or municipality may impose.

    So now, what is a professional tax, and who pays it? It is a tax imposed by the provincial or city government on each person engaged in the exercise or practice of his or her profession.

    The professional tax is paid by anyone who is legally authorized to practice a profession in the Philippines. This is interpreted to mean all professions that are supervised by the Professional Regulation Commission (PRC) and required to take and pass a licensure examination.

    Kindly note that any individual or corporation employing a person subject to professional tax shall require payment by that person of the tax on his profession before employment and annually thereafter, as may be provided under a duly enacted local ordinance.

    Furthermore, professionals exclusively employed in the government shall be exempt from the payment of this tax, unless he/she has been duly authorized to practice the profession outside of his/her official functions.

    When do you pay professional tax? The professional tax shall be payable annually, on or before the thirty-first (31st) day of January. Any person first beginning to practice a profession after the month of January must, however, pay the full tax before engaging therein. The Sanggunian concerned may, for a justifiable cause or reason, extend the time of payment of such taxes, fees, or charges, without surcharges or penalties, but only for a period not exceeding six (6) months.[1]

    Where do you pay the professional tax? The payment of the professional tax shall be made to the province or city where the professional practices his/her profession or has his/her principal office is maintained, in case one practices the profession in several places.

    Please remember that a professional who has paid the corresponding professional tax is entitled to practice his/her profession in any part of the Philippines without being subjected to any other national or local tax, license, or fee for the practice of such profession.

    In the case of Intestate Estate of Jose Uy v. Atty. Pacifico M. Maghari III (A.C. No. 10525, September 1, 2015), the Supreme Court stated that “with the professional tax receipt number, [authorities] can verify if the same person is qualified to engage in a profession in the place where he or she principally discharges his or her functions.”

    How much professional tax do we pay? Professionals shall pay an amount not to exceed PhP 300.00, Philippine currency, or the rate provided under a duly enacted local ordinance, subject to adjustment not exceeding ten percent (10%) every five (5) years.[2]

    What if I have several licenses from different professions? A line of profession does not become exempt even if conducted with some other profession for which the tax has been paid. Thus, an attorney who is also a licensed real estate broker must pay the professional tax imposed for each profession, if he/she is to practice both professions.

    What do I need to present before I pay the professional tax? To collect the tax, the provincial treasurer or his/her duly authorized representative shall require from such professionals their current annual registration cards issued by the competent authority before accepting payment of their professional tax for the current year.

    Finally, according to Local Finance Circular No. 001-2019 of the Department of Finance, the PRC shall likewise require the professionals to present proof of the annual payment of professional tax before registration of professionals or renewal of their licenses. This proof of payment is called the Professional Tax Receipt, or simply PTR.

    But is this being practiced by the PRC in its main office and in its regional offices? Share your experience in the comment section.

    After reading all the above, if you are an accredited real estate salesperson you may be wondering that since you are not required by Rep. Act No. 9646 to take and pass a licensure examination, do you still need to pay the professional tax?

    The answer is a resounding YES. Why? Because an accredited real estate salesperson is a type of Real Estate Service Practitioner (RESP) according to Section 3 of the Real Estate Service Act (RESA).

    Section 38 of RESA requires all real estate service practitioners to indicate the certificate of registration, professional identification card, PTR number, and APO receipt number, and the date of issuance and the duration of validity on the documents he/she signs, uses, or issues in connection with the practice of his/her profession.

    The penultimate question that needs to be addressed here is about the payment of business permits for those RESPs who operate a realty office – whether outside their place of residence or within their home office.

    As a professional who has already paid my professional tax, am I still required to pay business tax to the LGU?

    Section 6 of the Local Finance Circular No. 001-2019 of the Department of Finance states that a professional who has paid his/her professional tax shall be exempt from the payment of business permit fee in the operation of his/her office.

    However, a professional shall still be required to secure a business permit, at no cost, from the concerned LGU during the registration of office and renewal thereof, subject to a duly enacted local ordinance.

    Finally, if upon verification, a professional is actually engaged in selling, trading, or distributing any article of commerce of whatever kind, or involved in the function of trade, or undertakes any business activity that does not constitute the practice of profession, according to applicable law/s governing the practice of such profession, he/she shall be liable to pay the annual local business tax (LBT) to the city or municipality concerned, pursuant to the applicable rates provided under Sections 143 and 146 of the LGC, and as may be provided under a duly enacted local ordinance.

    Now that you know everything that you need to know about professional tax, when will you get yours? Remember, compliance with Section 38 of RESA is mandatory for all licensed real estate brokers and accredited real estate salespersons. Failure to do so will subject us to disciplinary sanctions by the PRBRES.

    Would you want to risk that?

    Hence, the final question here is, when will you pay your professional tax? I suggest that you do it on or before the end of next Friday. Don’t wait until the deadline. Be different. Comply as soon as you can.

    Have a successful and abundant year to everyone.

    ——-

    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] Section 167 [Time of Payment] of the Local Government Code of 1991.

    [2] Section 191 [Authority of Local Government Units to Adjust Rates of Tax Ordinance] of the Local Government Code of 1991.

  • Unlocking Success: Why Registering with the BIR is Non-Negotiable for New Real Estate Salespersons

    “The Practitioner shall secure all necessary licenses, permits and authority as may be required by law, ordinance or rules and regulations.”

    – Section 1 (b), Article III, PRBRES Resolution No. 39, Series of 2019

    By Realttorney®

    On the third week of January 2024, I will once again be part of a Real Estate Brokerage Seminar for Entry-Level Salespersons, sponsored by PREVAIL, Inc. We are always looking forward to such an event since it signifies that a lot of illegal practitioners (colorum) desire to become legitimate real estate service practitioners (RESPs).

    Photo by Sora Shimazaki on Pexels.com

    Now, if you are still not registered with the BIR then you must do so to be compliant with the National Internal Revenue Code of 1998, as amended. We also should follow the laws of the Philippines as mandated by the Code of Ethics and Responsibilities promulgated in PRBRES Resolution No. 39, Series of 2019. Hence, BIR registration is a must for all newly accredited real estate salespersons.

    I will quickly outline below, the steps to register with BIR as a self-employed individual (professional):

    STEP 1: Secure and fill up BIR Form 1901 – Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts.

    STEP 2: Submit the same with the following documentary requirements to the RDO having jurisdiction over the place where you hold office – it could be a home office or a commercial office space.

    Documentary Requirements:

    1. Birth certificate (Original and photocopy);
    2. Marriage certificate (Original and photocopy); and
    3. Birth certificate of children (Original and photocopy);

    Other documents for submission, if requested:

    1. Mayor’s Permit (Original and photocopy);
    2. Contract of Lease (if renting);
    3. Title/Tax Declaration & SPA/Affidavit of Consent if the location is not owned by the applicant (if not renting); and
    4. Sketch of location.

    STEP 3: Pay the Annual Registration Fee (P500.00) at the Authorized Agent Banks of the concerned RDO.

    STEP 4: Pay Documentary Stamp Tax (DST) [loose DST / BIR Form 2000 for DST on Contract of Lease, etc.). Present proofs of payment upon submission of the documentary requirements.

    STEP 5: Submit requirements for Authority to Print (ATP) and registration of books of accounts.

    Documentary Requirements:

    1. Accomplished BIR Form 1906;
    2. Job order from the printer;
    3. Final and clear sample of receipt and invoices (machine printed);
    4. Photocopy of Taxpayer Identification Number Card; and
    5. Photocopy of BIR Form 0605 (payment of registration fee).

    Book of Accounts:

    1. Cash Receipts;
    2. Cash Disbursement;
    3. Ledger;
    4. Journal;
    5. Subsidiary Sales Journal; and
    6. Subsidiary Purchase Journal [the last 2 are additional books for VAT Taxpayer].

    STEP 6: Attend the taxpayer’s initial briefing to be conducted by the RDO concerned for new registrants to apprise them of their rights and duties/responsibilities as taxpayers.

    STEP 7: Wait for the RDO to issue the Certificate of Registration (BIR Form 2303) together with the “Ask for Receipt” notice, Authority to Print, and Books of Accounts.

    A more comprehensive discussion of the steps enumerated above including the related revenue issuances promulgated by the BIR and codal references in the National Internal Revenue Code can be found on the BIR website (www.bir.gov.ph).

    A final reminder to all new salespersons and brokers reading this article. The tax code states that “all individuals engaged in trade or business shall accomplish and file the application on or before the commencement of business operation or from the day the first (1st) transaction occurred or within thirty (30) days from the application with the LGU for issuance of Mayor’s Permit/Professional Tax Receipt (PTR), whichever comes earlier.”

    I encourage newly accredited salespersons and newly licensed real estate brokers to register with the BIR as soon as possible. To reiterate, the Code of Ethics and Responsibility mandates all RESPs to register with the BIR. Finally, in 2005, Atty. Alexander L. Lacson published his book “12 Little Things Every Filipino Can Do To Help Our Country.”

    “PAY YOUR TAXES” is the 10th Little Thing he listed. I quote some portions of what he wrote in pages 75 – 80, which resonates the same message today as if it was written 19 years ago:

    “Of the many duties of a citizen under our Constitution, paying taxes is one of the most crucial. Because taxes are the lifeblood of our government, of our nation.

    “It is what we use to buy the basic textbooks for our millions of children in the country, or to build additional classrooms in public schools nationwide…

    “Taxes are what we use to buy the most basic of medicines, often generic and cheap, that our Department of Health officials distribute to 34 million Filipinos nationwide who live below the poverty line.

    “It is what we use to pay all our government employees nationwide – our soldiers, our policemen, our public school teachers, among many others.

    x     x     x

    “Viewed in this light, the taxes that you and I pay are actually not lost or wasted completely. A substantial portion of the taxes we pay is still put to good use. Because there are many public servants – not only a few or some – who still do their jobs properly. There are many of them, these honest and faithful ones, but maybe many of them are just in the rank and file, like you and me.

    “But they are there. Among the silent many who hold the center and keep our government from falling apart. They are the ones who keep our public institutions intact through storms and scandals, notwithstanding the misguided ambitions and corruption of some of their leaders.

    “It is for this reason that we should continue paying our taxes. The good ones in the government are still good reasons for us to continue paying our taxes properly. The challenge for us is just how to increase the number of these good ones in government.

    x     x     x

    “In 2003, P83 Billion was collected from individual income taxes. But 91% of this amount came from salaried workers from the government and private sector, people who have no choice since their income taxes are withheld mandatorily. Only P7 Billion of P83 Billion (or 9%) came from businessmen and professionals like doctors, lawyers, accountants, architects, and dentists, among others.

    x     x     x

    “Can you imagine if our businessmen and professionals pay more income taxes? Or if our government is able to collect 21% this year instead of the 14.1% last year because we all decided to pay 50% more taxes this year? This means that our government will have more funds to perform its duties and obligations to the public.

    x     x     x

    “But we have to pay our taxes properly. Because we all live in the same country. Because this government, whether we like it or not, is our government. Its cost is a burden we must all share. The task of building this nation is a task that we all must share. We all must contribute to building this kind of nation we dream of for ourselves. Each one of us has a role in it. Each one of us has a responsibility to it.”

    We sincerely hope that all newly accredited real estate salespersons will register themselves at the RDO nearest their place of residence. This is one of the keys to a successful career in the real estate service sector. There are no ifs or buts about this.

    ——-

    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.

  • Reminders as 2024 Rolls In

    “Our goal is to set the gold standard when it comes to compliance.”

    – Cathy Engelberg, Commissioner of the WNBA

    By Realttorney®

    Happy New Year. We wish you all the best for the Year of the Dragon. May you all work synergistically with your teams or other REPs to have the most prosperous 2024 possible.

    Photo by fauxels on Pexels.com

    We hope that you have your yearly goals written and these goals broken down into quarterly, monthly, and weekly goals.  Since this is the first working day of 2024, we would like to remind all real estate service professionals (RESPs) of some regulatory compliances according to Republic Act No 9646 and its Implementing Rules and Regulations (IRR).

    First, in Section 38, Rule IV of the IRR “Real estate service practitioners shall be required to indicate the certificate of registration, professional identification card, Privilege Tax Receipt (PTR) number, AIPO membership and/or receipt number.”

    Now, the IRR says ”privilege tax receipt” but in reality, this is called the Professional Tax Receipt or PTR. Yet, despite the “misspelling”, the mandate is clear. All licensed RESPs should get a PTR.

    Here are my previous year’s Professional Tax Receipts as an attorney and real estate broker

    It costs around PhP 300.00 and you can get this at the Office of the Treasurer of your LGU. Just say that you will get a PTR when you stand in front of the transaction window of the Treasurer’s Office. Some LGUs may not have a PTR, but instead have an OTR – the Occupational Tax Receipt – which is the same thing.

    What must you bring with you when you apply for a PTR? For veteran RESPs, a photocopy, digital copy, or the original copy of the PTR of the previous year will suffice. For the new salespersons and brokers, you need to bring a photocopy of your Certificate of Registration and the PRC ID Card with you.

    Second, if you are already registered with the Bureau of Internal Revenue (BIR) then you should pay your annual registration fee of PhP 500.00 using the BIR Form 0605. You can remit the payment at the BIR Revenue District Office (RDO) that you registered in or at the Authorized Agent Banks of the concerned RDO.

    Third, and final reminder, concerns accredited real estate salespersons and licensed real estate brokers who engage in project selling. If it is your cup of tea to sell subdivision and condominium projects then you are mandated by Presidential Decree No. 957 to register with the Department of Human Settlements and Urban Development (DHSUD), according to existing rules and regulations.

    Like securing a PTR, the Certificate of Registration must be renewed annually. You can apply at the Main office of DHSUD in Quezon City or at its Regional Offices nearest your place of residence.

    For licensed real estate brokers wanting to do project selling for the first time or those who are renewing their certificate of registration, kindly prepare for submission the following:

    (1) duly accomplished Application Form – which is specific per region. The application form you can download if you click here is only for Region IV-A [CALABARZON];

    (1) Photocopy of valid PRC-issued Certificate of Registration and PRC-issued Professional Identification Card (Originals thereof to be presented upon filing for comparison as faithful reproduction);

    (2) previous year’s Official Receipt;

    (3) Two recent 2 X 2 ID pictures; and

    (4) Surety/Cash Bond.

    If you are lucky to have been issued an ID Card issued by DHSUD then a copy of it can also be submitted. The registration fee is PhP 720.00 if renewed before expiration.

    Here is my DHSUD Identification Card for the year 2023

    Meanwhile, for newly accredited salespersons or those wanting to renew, you need to submit the following:

    (1) duly accomplished Application Form – which is specific per region. The application form you can download if you click here is only for Region IV-A [CALABARZON];

    (2) Two recent 2 X 2 ID pictures;

    (3) a copy of the PRC-issued accreditation card, or PRC-issued Official Receipt. or the PRC-issued claim stub;

    (4) Cash/Surety bond; and

    (5) the Letter of Engagement/Employment signed by a DHSUD registered Real Estate Broker with these attachments – copies of the PRC ID card of the broker, the DHSUD ID card, and the listing of accredited salespersons from PRC under the broker’s name. The registration fee is PhP 288.00 if renewed before expiration on December 31.

    Here is a sample of the Salesperson’s Letter of Engagement/Employment. Once again, notice that the Letter is region-specific. I secured this since I filed my requirements to the CALABARZON region in Brgy. Halang, Calamba City, Province of Laguna.

    Here is a final note. According to Section 4.7. of PRBRES Resolution No. 11, Series of 2021, “it is only after Mass Oath taking that the RES-Applicant can be considered Accredited and can already practice the real estate brokerage profession and may now register at DHSUD.”

    Let it be known that the Real Estate Salesperson-Applicant can only apply for registration at the DHSUD after attending the oathtaking ceremony – whether in person or online – NOT before. We hope this is clear.

    So kindly perform these regulatory compliances for you to work fully compliant with the requirements of the law that regulates our profession. Failure to comply is a violation of the law and the professional can be subjected to criminal and administrative sanctions.

    Start the year right. As professionals, these are the things we do. It is part of our identity as legal and fully compliant real estate service professionals.

    ——-

    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.

  • 7 Steps to Start a Successful Real Estate Brokerage in the Philippines

    “If you want to succeed in real estate, be persistent, be passionate, and never give up.”

    –  Barbara Corcoran, American businesswoman, investor, and television personality

    By Realttorney®

    Are you are licensed real estate broker in the Philippines who is a project seller and wants to go into general brokerage to maximize all the opportunities that the real estate service sector has to offer?

    Are you a private practitioner who belongs to a branded brokerage house but is dying to establish your own real estate brokerage business?

    Finally, are you a graduating student of the Bachelor of Science in Real Estate Management in 2024 and are confident to pass the real estate brokerage examination in April 2024?

    Photo by energepic.com on Pexels.com

    Embarking on the journey to establish a real estate brokerage in the Philippines is a significant endeavor that requires meticulous planning, industry knowledge, and a commitment to ethical conduct. It is a huge endeavor, but rewarding nonetheless.

    These aspiring entrepreneurs in the real estate sector must navigate through various regulatory requirements, market dynamics, and operational challenges to carve a niche in this competitive landscape. This article outlines the essential steps to initiate and grow a successful real estate brokerage in the Philippines, focusing on practical insights and strategic considerations.

    Step 1. Acquire the Necessary Qualifications and Licenses

    All Real Estate Service Practitioners (RESPs) know this as gospel truth. No one can practice the real estate service profession without being licensed or accredited by the Professional Regulatory Board of Real Estate Service (PRBRES) according to the provisions of Rep. Act No. 9646 or the Real Estate Service Act. This means that if you are not yet licensed, then this article may not be for you to read.

    But if you are persistent and you really want to become a licensed real estate broker or an accredited real estate salesperson, then you have to acquire the necessary qualifications. To become an accredited real estate salesperson then you need to undergo a 12-hour real estate training seminar for new-entry salespersons.

    But, please remember that you need to have a minimum of 72 units of college subjects as a minimum qualification to get accredited by PRBRES. Now, if you want to be a real estate broker — because someone told you that the earning capacity is limitless — then you need to obtain a Bachelor’s degree in Real Estate Management under Section 14 (b) of Rep. Act No. 9646.

    After graduating with a degree in Real Estate Management then you need to pass the licensure examination to be conducted by the PRBRES under the supervision of the Professional Regulation Commission (PRC). Familiarize yourself with Republic Act No. 9646 to ensure compliance with regulatory standards.

    Step 2. Develop a Comprehensive Business Plan

    What? Do I need to make a business plan? Yes, of course, if you want to succeed in your latest endeavor. Let me share with you a wonderful quote from Benjamin Franklin. He said, “By failing to plan, you are preparing to fail.” It is also similar to what Winston Churchill said: “He who fails to plan is planning to fail”.

    It does not need to be a complicated business plan. Keep it simple as far as practical. But you have to cover these three critical items that would become the foundation of your entire business plan.

    The first critical item is Market Analysis. Conduct thorough market research to identify target markets, assess competition, and analyze demand-supply dynamics. In my experience, I concentrate only on real estate transactions in the Metro Tagaytay area. I just want to specialize in a particular real estate market where I can operate comfortably. Or in a class of real estate that I can handle with ease, like farmland or raw land.

    The message here is don’t be a jack-of-all-trades and master of none. One cannot effectively service the entire real estate market in the Philippines, covering all 13 or 14 regions. You have to choose your niche, your area of expertise, where you can effectively operate.

    The second critical item is Financial Projections. Prepare detailed financial projections, including startup costs, operating expenses, and revenue forecasts. But, I don’t know how to do this? Do not despair. The greatest source of information regarding this matter is at your fingertips… and it is free. If you like to read, try Google Search. If you like to listen to instructions, try YouTube. Or, call a friend who has done this or has experience in making financial projections.

    The third critical item is Strategic Objectives. Define clear objectives for the incoming year or the current year. Create the mission and vision for your real estate brokerage. Then, outline the unique value proposition for the clients and stakeholders of the brokerage.

    Find a quiet place and time where you can do your planning without interruption from your kids, spouse, or co-workers. My suggestion is to wake up 30 minutes earlier than your usual time of waking up. Use that “extra” time you have to start planning.

    Step 3. Establish a Legal Entity and Compliance Framework

    As licensed real estate brokers, it is a given that we are already registered with the Bureau of Internal Revenue (BIR). As such, if you want to venture on your own, outside the structure of your current brokerage, then we are considered independent contractors. But remember that independent contractors are considered sole proprietors in their business endeavors.

    The critical and most important act for Step 3 is to determine your Business Structure. Decide on the most suitable legal structure for your brokerage, such as a sole proprietorship, partnership, or corporation. Know the tax deductions allowable for each kind of structure, as well as the monthly, quarterly, and annual regulatory compliance with the BIR.

    If the entity you chose is a partnership or a corporation, then you also have to know the different Legal Compliance requirements for your chosen business entity. Ensure adherence to regulatory requirements, including registration with the Securities and Exchange Commission (SEC) and compliance with local government rules and regulations.

    Can you set up a One-Person Corporation to conduct your real estate brokerage? In my opinion, the answer is YES. But it is a separate article where my views on it are fully discussed.

    Step 4. Build a Robust Network and Partnerships

    I have always said in all my lectures that the real estate service sector is a relationship-based endeavor. The more you grow your network, the longer and better your career will be. But, create a high-caliber network composed of licensed real estate service practitioners (RESPs), never with colorum or pseudo practitioners.

    Cultivate relationships with real estate developers, property owners, real estate investors, and other industry experts and stakeholders. Cultivating a relationship is quid pro quo. What value do you bring to the table? What value do you offer to the other party?

    Consider being a part of a Professional Association of your choice. Of course, Section 34, Rep. Act No. 9646 mandates that all real estate service practitioners duly registered with PRBRES shall automatically become members of the accredited and integrated professional organization (AIPO) of real estate service practitioners.

    But apart from joining the AIPO, you may still want to consider joining reputable real estate associations and organizations, such as the Real Estate Brokers Association of the Philippines (REBAP), to enhance credibility and access to resources. Eventually, these current real estate service organizations will transform themselves into specialty real estate organizations to create specialized RESPs.

    If you ask: What areas of specialization are being proposed by PRBRES? At this early stage, here are the three proposed areas: (1) General brokerage, Titling, and Documentation; (2) Residential Project Selling; and (3) Foreclosed Properties. PRBRES said that these are the initial areas that may or may not be expanded.

    Step 5. Invest in Marketing and Branding

    What makes you different from all the other real estate brokers and salespersons working in your area of operation? What sets you apart from the others? Why would a seller or a buyer contact you for assistance in their real estate transaction?

    At this stage of your planning process, you need to embrace the wisdom of having a Brand Identity. Another critical component of your business plan should include developing a compelling brand identity. This includes creating a logo, website, and marketing materials that resonate with your target audience.

    How much Digital Presence do you need? Leverage online platforms, social media, and digital marketing strategies to enhance visibility and attract potential clients. Wow!! Are there a lot of things to consider? Yes, that is why planning on how to best use these strategies and implement them well is paramount.

    These are part of your marketing plan, which is a part of your overall business plan. Why is this a critical part of the plan? It is so because to put these into action, you will spend a little or more than a little financial resource. Hence, you need a plan to know how much to allocate per month to execute these important marketing tools at your disposal.

    Why do all these? As a licensed real estate broker or accredited real estate salesperson, you are considered a professional. And what sets you apart from the colorum or pseudo-practitioners who continue to dominate the market? Aside from your license or accreditation, it is a well-crafted business plan composed of the items we have so far discussed.

    Step 6. Implement Effective Operational Systems

    Now that you have your marketing strategies all planned out, you need to consider what technology you will use to streamline and automate your day-to-day operations. You have to determine how to systematize and manage your listings, site visits or orientations, client follow-ups, and transaction facilitation. There are a number and advanced real estate software and technology solutions that you (as a professional) can adopt. But, of course, this has a cost. So it is important to list this as a necessary cost of your operations.

    Team Development: Have you considered creating your own team? Recruit and train your own team of accredited real estate salespersons, ensuring alignment with your brokerage’s values and customer service standards.

    Make a handbook that will explicitly outline the mission and vision of your brokerage, the values of your organization, and the standard of service that will be experienced by your clients and/or customers.

    In the alternative, have you considered forming a super-team with other RESPs? I know of a super-team, who are members of our organization, which decided to form a corporation to synergize their efforts and resources — financial and manpower — that make their earning opportunities and capacities more efficient.

    If two brains are better than one, then probably five brains are far superior to one, correct? So, consider this carefully. It does not hurt if you find like-minded professionals who are aligned with your goals and values. This creates leverage that benefits the entire group in the end.

    Step 7. Prioritize Ethical Conduct and Professionalism

    The final step is to remind yourself that money is not the end-all and be-all of our profession. In a previous article, I argued that INTEGRITY is the most important personal quality a licensed real estate broker needs to be successful in the real estate service sector.

    Hence, it is the same thing when you want to start your own real estate brokerage. Keep your eye on our Code of Ethics. All RESPs should uphold the highest standards of ethical conduct, adhering to the Code of Ethics for Real Estate Service Practitioners to build trust and credibility. This is non-negotiable. Our long-term success is dependent on the reputation we build as a real estate service professional.

    Client-Centric Approach: We should keep in mind the needs of our clients before our own. Of course, there are exceptions to the rule, like difficult or obnoxious clients. But we should always prioritize client satisfaction, transparency, and integrity in all interactions, so we can foster long-term relationships and secure referrals for future opportunities.

    Conclusion

    Embarking on the entrepreneurial journey to establish a real estate brokerage in the Philippines requires a strategic approach, an unwavering commitment to ethical conduct, and a deep understanding of the industry landscape. By following these essential steps and continuously adapting to market trends and regulatory changes, aspiring real estate brokers can lay a solid foundation for success, driving growth, and making a meaningful impact in the dynamic Philippine real estate market.

    By adhering to the principles of integrity, professionalism, and client-centric service, real estate brokerages can navigate challenges, capitalize on opportunities, and build a reputation as trusted advisors and industry leaders.

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    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.