Department of Public Highways
        National Housing Authority
        All local governments and the Department of Local Governments and Community
        Development
        The Philippine National Bank and all government banks
        The Budget Commission
        Local Water Utilities Administration
        National Electrification Administration
        Human Settlements Commission
        Department of Education and Culture
        Department of Health
        Department of Finance
        Government Service Insurance System
        Social Security System
        Armed Forces of the Philippines and Police Authorities

A.    Redefine the participation of national and local government agencies in the Program;

B.    Define more specifically the components of the total project costs which can reasonable be charged to beneficiaries;

C.    Provide an equitable basis for the interest charges that may be imposed on borrowings of both the local governments and beneficiaries;

D.    Prescribe a more flexible land tenure system applicable to project areas; and

E.    Ensure the flow of adequate funds to insure completion of specific projects and afford continuity to the Program as a whole.

It is hereby directed that:

1.    In the interpretation of the provisions of LOI 555 pertaining to the participation of national and local agencies and the allocation of cost, the following shall be used as guidelines:

a)    National government agencies participating in the SIR Program shall provide funds and make available technical assistance and undertake construction only for such components of projects under the program which normally fall under their functional responsibilities.

b)    The local government undertaking the project shall provide funds for, and plan and implement through their Slum Improvement and Resettlement (SIR) staff such components of the project that are normally the responsibility of the city or municipal governments.

c)    Project beneficiaries shall be charged and pay, in addition, to the cost of the land, the cost incurred in providing them such services and facilities designed and intended mainly for their use or benefit excepting those normally provided by either national agencies or the local government and less whatever revenues that can be generated from other components of the project.

a)     The price at which land shall be sold to beneficiaries shall consist of: i) the cost of acquisition by the government, if previously owned privately, or its market or assessed value, whichever is lower, if government owned; ii) the cost of providing the services and facilities and, wherever applicable the cost of reclamation less whatever revenue can be granted from other project components or other sources and applied to the project and iii) the interest charges as provided under Paragraph 4 of this Letter of Instructions. These costs shall be those allocable to the residential areas of the project as provided in Paragraph 1 above.

b)     The total price of the land shall be amortized for a minimum period of 25 years, provided that, the local government in consultation and with the approval of the National Housing Authority may adopt other amortization schemes. Upon option to purchase, the title of the land shall be issued to the beneficiary subject to a lien in the form of a mortgage to cover whatever balances of the costs as determined in a) above are still unpaid, and such land shall thereafter be held under freehold with restrictions.

c)     The cost of the land and other allocated costs as proposed by the local government and approved by the Authority may be excluded in the computation of lease payment in consideration of the beneficiary's capacity-to-pay provided that when the beneficiary exercises his option to purchase, these costs and interest charges accrued on them are added to the total costs to constitute the purchase price as determined in a) above.

d)     Restrictions applicable on freehold title shall be prepared by the local government and approved by the Authority considering the thrust of the program to the low-income groups and these restrictions shall be annotated at the back of evidences of ownership.

e)     Should there be any lot which are titled or with vested rights such as Deed of Sale, Agreements to Sell which may recognized by the Authority, and the local government and these titles or vested rights are not superseded in the acquisition of the project area when they may be likewise held under freehold with restriction provided that they pay all allocable costs under this Section excepting the cost of the land.

a)     The Armed Forces of the Philippines and the Integrated Police Force, to provide assistance in the eviction and ejectment of families within the project area which are not qualified for benefits under the program, or if qualified, have violated the rules and regulations of its implementation;

b)     The Philippine National Bank and all other government banks, to provide financial services including the collection, accounting and remittance of lease-rentals and amortizations as envisioned by Letter of Instructions No. 555;

c)     The Department of Education and Culture, to staff schools and implement educational programs for the project area;

d)     The Department of Health in the institution and the implementation of health programs for the project area;

e)     The National Electrification Administration in the financing of electrical facilities for the project sites and technical assistance for the same.

8.     To facilitate program and project coordination, clearances required under various laws and ordinances and obtained by the National Housing Authority, as lead agency, particularly for aerial photographs, shall be applicable for all housing sites and projects coordinated by that agency.

9.     The National Housing Authority may finance the requirement of the Slum Improvement Resettlement (SIR) Program through bonds, borrowings or other sources it may see fit under Presidential Decree No. 757. The interest cost and terms of repayment of these may be determined as prescribed by Presidential Decree No. 757.

10.     The provisions of Letter of Instructions No. 555 to the extent that they are not consistent with the principles, guidelines and provisions of this Letter of Instructions are hereby amended.

Since 19.07.98.