URBAN INSTITUTE OF REAL ESTATE AND CONSTRUCTION

Tel. No. 509-4094, CP 0927-749-5487 or 0939-137-9242, email: [email protected]

NOTES ON

URBAN DEVELOPMENT AND HOUSING ACT (UDHA)

(RA 7279) LINA LAW
Effectivity - March 29, 1992

DECLARATION OF STATE POLICY AND PROGRAM

It shall be the policy of the State to undertake, in cooperation with the private sector, a comprehensive
and continuing Urban Development and Housing Program, hereinafter referred to as the Program, which
shall:
a.

Uplift the conditions of the under privileged and homeless citizens in urban areas and in
resettlement areas by making available to them decent housing at affordable cost, basic services,
and employment opportunities;

b.

Provide for the rational use and development of urban land in order to bring about the following;
1.
2.
3.
4.
5.

Equitable utilization of residential lands in urban and urbanizable areas with particular
attention to the needs and requirements of the under privileged and homeless citizens and
not merely on the basis of market forces;
Optimization of the use and productivity of land and urban resources;
Development of urban areas conducive to commercial and industrial activities which can
generate more economic opportunities for the people;
Reduction in urban dysfunction, particularly those that adversely affect public health, safety
and ecology; and
Access to land and housing by the under-privileged and homeless citizens;

c.

Adopt workable policies to regulate and direct urban growth and expansion towards a dispersed
urban net and more balanced urban- rural interdependence;

d.

Provide for an equitable land tenure system that shall guarantee security of tenure to Program
beneficiaries but shall respect the rights of small property owners and ensure the payment of just
compensation;

e.

Encourage more effective people's participation in the urban development process; and

f.

Improve the capability of local government units in undertaking urban development and housing
programs and projects.

DEFINITION OF TERMS

Blighted Lands - refers to the areas where the structures are dilapidated, obsolete and unsanitary,
tending to depreciate the value of the land and prevent normal development and use of the area.

Idle Lands - refers to non-agricultural lands in urban and urbanizable areas on which no
improvements, as herein defined, have been made by the owner, as certified by the city, municipal
or provincial assessors.

Land Assembly or Consolidation - refers to the acquisition of lots of varying ownership through
purchase or expropriation for the purpose of planned and rational development and socialized
housing programs without individual property boundary restrictions.

Land Banking - refers to the acquisition of land at value based on existing use in advance of
actual need to promote planned development and socialized housing programs.

Professional squatters - refers to individuals or groups who occupy lands without the express
consent of the landowner and who have sufficient income for legitimate housing. The term shall
also apply to persons who have previously been awarded homelots or housing units by the
Government but who sold, leased or transferred the same to settle illegally in the same place or in

URBAN INSTITUTE OF REAL ESTATE AND CONSTRUCTION

Tel. No. 509-4094, CP 0927-749-5487 or 0939-137-9242, email: [email protected]

another urban area, and non-bonafide occupants and intruders of lands reserved for socialized
housing. The term shall not apply to individuals or groups who simply rent land and housing
from professional squatters or squatting syndicates.

Slum Improvement and Resettlement Program or SIR - refer to the program of the National
Housing Authority of upgrading and improving blighted squatter areas outside of Metro Manila
pursuant to existing statutes and pertinent executive issuances.

Socialized Housing - refers to housing programs and projects covering houses and lots or
homelots only undertaken by homeless citizens which shall include sites and services
development, such as long-term financing, liberalized terms on interest payments, and such other
benefits in accordance with the provisions of this Act.

Squatting Syndicates - refers to groups of persons engaged in the business of squatter housing
for profit or gain.

Unregistered or Abandoned lands - refer to lands in urban and urbanizable areas which are not
registered with the Register of Deeds, or with the city or municipal assessor's office concerned, or
which are uninhabited by the owner and have not been developed or devoted for any useful
purpose, or appears not utilized for a period of three (3) consecutive years immediately prior to
the issuance and receipt or publication of notice of acquisition by the Government as provided
under this Act. It does not include land which has been abandoned by reason of force majeure or
any other fortuitous event: Provided, that prior to such event, such land was previously used for
some useful or economic purpose.

COVERAGE
All lands in Urban and Urbanizable areas, including existing areas for priority development, zonal
improvement sites, and in other areas that may be identified by the local government units as suitable for
socialized housing.
EXEMPTIONS
a.
b.
c.

d.
e.

Those included in the coverage of Republic Act No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law;
Those actually used for national defense and security of the State;
Those used, reserved or otherwise set aside for government offices, facilities and other
installations, whether owned by the National Government, its agencies and instrumentality,
including government-owned or controlled corporations, or by the local government units:
Provided, however, That the lands herein mentioned, or portions thereof, which have not been
used for the purpose for which they have been reserved or set aside for the past ten years from
the effectivity of this Act, shall be covered by this Act;
Those used or set aside for parks, reserves for flora and fauna, forests and watersheds, and other
areas necessary to maintain ecological balance or environmental protection, as determined and
certified to by the proper government agency; and
Those actually and primarily used for religious, charitable, or educational purposes, cultural and
historical sites, hospitals and health centers, and cemeteries or memorial parks.

EXPROPRIATION OF IDLE LANDS

All idle lands in urban and urbanizable areas, as defined and identified in accordance with this Act,
shall be expropriated and shall form parts of the public domain. These lands shall be disposed of or
utilized by the Government for such purposes that conform with their land use plans. Expropriation
proceedings shall be instituted if, after the lapse of one (1) year following receipt of notice of acquisition,
the owner fails to introduce improvements as defined in Section 3 (f) hereof, except in the case of force

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Tel. No. 509-4094, CP 0927-749-5487 or 0939-137-9242, email: [email protected]

majeure and other fortuitous events. Exempted from this provision, however, are residential lands owned
by small property owners or those the ownership of which is subject of a pending litigation.
LIMITATIONS ON THE DISPOSITION OF LANDS FOR SOCIALIZED HOUSING
No land for socialized housing, including improvements or rights thereon, shall be sold, alienated,
conveyed, encumbered or leased by any beneficiary of this Program except to qualified Program
beneficiaries as determined by the government agency concerned.
ELIGIBILITY CRITERIA FOR SOCIALIZED HOUSING PROGRAM BENEFICIARIES
To qualify for the socialized housing program, a beneficiary:
a.

Must be a Filipino citizen;

b.

Must be an underprivileged and homeless citizen, as defined in Section 3 of this Act;

c.

Must not own any real property whether in the urban or rural areas; and

d.

Must not be a professional squatter or a member of any squatting syndicate.

BALANCE HOUSING DEVELOPMENT (20 % SOCIALIZED HOUSING)

The Program shall include a system to be specified in the Framework Plan whereby developers of
proposed subdivision projects shall be required to develop an area for socialized housing equivalent to at
least twenty percent (20%) of the total subdivision area or total subdivision project cost, at the option of
the developer, within the same city or municipality, whenever feasible, and in accordance with the
standard set by the Housing Land Use Regulatory Board and other existing laws. The balanced housing
development as herein required may also be complied with by the developers concerned in any of the
following manner:
a.

Development of new settlement;

b.

Slum upgrading or renewal of areas for priority development either through zonal improvement
programs or slum improvement and resettlement programs;

c.

Joint-venture projects with either the local government units or any of the housing agencies; or

d.

Participation in the community mortgage program.

INCENTIVES FOR PRIVATE SECTOR PARTICIPATING IN SOCIALIZED HOUSING

To encourage greater private sector participation in socialized housing and further reduce the cost of
housing units for the benefit of the under-privileged and homeless, the following incentives shall be
extended to the private sector:
a.

Reduction and simplification of qualification and accreditation for participating private

developers;

b.

Creation of one-stop offices in the different regions of the country for the processing, approval
and issuance of clearances, permits and licenses: Provided, That clearances, permits and licenses
shall be issued within ninety (90) days from the date of submission of all requirements by the
participating private developers;

c.

Simplification of financing procedures; and

d.

Exemption from the payment of the following: (As per Revenue Regulations No. 11-97 Dated
July 4, 1997 amending Revenue Regulations No. 9-93)
1.

Project-related corporate or individual income taxes;

URBAN INSTITUTE OF REAL ESTATE AND CONSTRUCTION

Tel. No. 509-4094, CP 0927-749-5487 or 0939-137-9242, email: [email protected]

2.

Capital gains tax on sale of raw lands for use in the project;

3.

Value-added tax for the project contractor/developer/seller or owner of socialized housing;

4.

Transfer tax for both rawland and completed projects; and

5.

Donor's tax for lands certified by the local government units to have been donated for
socialized housing purposes.

EVICTION AND DEMOLITION

Eviction or Demolition as a practice shall be discouraged. Eviction or demolition, however, may be
allowed under the following situations:
1.

When persons or entities occupy danger areas such as esteros, railroad tracks, garbage dumps,
riverbanks, shorelines, waterways, and other public places such as sidewalks, roads, parks and
playgrounds;

2.

When government infrastructure projects with available funding are about to be implemented; or

3.

When there is a court order for eviction and demolition.

COMMUNITY MORTGAGE PROGRAM

The Community Mortgage Program (CMP) is a mortgage financing program of the National Home
Mortgage Finance Corporation which assists legally organized associations of underprivileged and
homeless citizens to purchase and develop a tract of land under the concept of community ownership. The
primary objective of the program is to assist residents of blighted or depressed areas to own the lots they
occupy, or where they choose to relocate to, and eventually improve their neighborhood and homes to the
extent of their affordability.
PRIVILEGES OR INCENTIVES GRANTED TO PARTICIPANTS IN THE CMP
a.

Government-owned or -controlled corporations and local government units, may dispose of their
idle lands suitable for socialized housing under the CMP through negotiated sale at price based
on acquisition cost plus financial carrying costs;

b.

Properties sold under the CMP shall be exempted from the capital gains tax; and

c.

Beneficiaries under the CMP shall not be evicted nor dispossessed of their lands or improvements
unless they have incurred arrears in payments of amortization for three (3) months.

ROLE OF LOCAL GOVERNMENT UNITS

The government units shall be charged with the implementation of this Act in their respective
localities, in coordination with the Housing and Urban Development Coordinating council, the national
housing agencies, the Presidential Commission for the Urban Poor, the private sector and other nongovernment organizations.
They shall prepare a comprehensive land use plan for their respective localities in accordance with
the provisions of this Act.
ROLE OF GOVERNMENT HOUSING AGENCIES
In addition to their respective existing powers and functions, and those provided for in this Act, the
hereunder mentioned housing agencies shall perform the following:

URBAN INSTITUTE OF REAL ESTATE AND CONSTRUCTION

Tel. No. 509-4094, CP 0927-749-5487 or 0939-137-9242, email: [email protected]

a.

The Housing and Urban Development coordinating Council shall, through the key housing
agencies, provide local government units with necessary support such as;
1.

Formulation of standards and guidelines as well as providing technical support in the

presentation of town and land use plans;

2.

In coordination with the National Economic and Development Authority and the National
Statistics Office, provide data and information for forward-planning by the local government
units in their areas, particularly on projections as to the population and development trends
in their localities and the corresponding investment programs needed to provide appropriate
types and levels of infrastructure, utilities, services and land use patterns; and

3.

Assistance in obtaining funds and other resources needed in the urban development and
housing programs in their areas of responsibility.

b.

The National Housing Authority, upon request of local government units, shall provide technical
and other forms of assistance in the implementation of their respective urban development and
housing programs with the objective of augmenting and enhancing local government capabilities
in the provision of housing benefits to their constituents;

c.

The National Home Mortgage Finance Corporation shall administer Community Mortgage
Program under this Act and promulgate rules and regulations necessary to carry out the
provisions of this Act; and

d.

The Home Insurance Guaranty Corporation shall design an appropriate guarantee scheme to
encourage financial institutions to go into direct lending for housing.

PENALTY CLAUSE
Any person who violates any provisions of this Act shall be imposed the penalty of not more than six
(6) years of imprisonment or a fine of not less than Five thousand pesos (P5,000.00) but not more than
One hundred thousand pesos (P100,000.00), or both, at the discretion of the court: Provided, That, if the
offender is a corporation, partnership, association or other juridical entity, the penalty shall be imposed on
the officer or officers of said corporation, partnership, association or juridical entity who caused the
justification.