CHAPTER
I
Title
and Declaration of Policy
Section
1.Title. — This Act shall be known
as the "Home Guaranty Corporation Act of 2000."
Sec.
2. Declaration of Policy. — It
is hereby declared the policy of the State to undertake, in cooperation
with the private sector, a continuing nationwide housing program which
will make available at affordable cost decent housing.
In
recognition of the role of housing as catalyst of economic growth and
development,
it is hereby declared a state policy to strengthen, promote and support
the component activities of housing production and finance.
Sec.
3. Statement of Objectives. —
Towards this end, the State shall integrate all laws providing for
housing
credit guaranty to attain the following objectives:chanrobles virtuallaw libraryred
(a) Ensure
continuous funding support to vigorously implement the government's
programs
for urban and rural housing, resettlement, the development of sites and
services, and the renewal of blighted areas;
(b) Enhance
the capability of low-income groups to acquire decent and low-cost
housing
units through the introduction of support mechanisms and facilities
which
shall render affordable such acquisitions;
(c) Provide
for a strong and sustainable housing finance program with complimentary
support systems, which will pump prime, build-up, and strengthen
available
sources of cheap and long-term capital;
(d) Increase
the private sector's participation in the investment of their funds
into
the mainstream of housing finance for developmental and end-user
financing
requirements;
(e) Encourage
the flow of private funds for mass housing development and homebuyers'
financing through a viable system of mortgage and credit guaranty;chan
robles virtual law library
(f) Enjoin
the active participation of local government units in socialized
housing
programs through adequate measures for housing development in their
respective
areas;
(g) Strengthen
the capital base and optimize the resources of the National Government
and the Corporation to ensure that homeless families across the nation
can enjoy the benefits that can be derived from the government's
guaranty
facilities;
(h) Serve
the housing requirements of all the underprivileged and those gainfully
employed, especially those who are not members of any funding agencies
such as the Government Service and Insurance System (GSIS), the Social
Security System (SSS), and the Home Development Mutual Fund (HDMF); and
(i) Institutionalize
and promote the aided self-help approach in homeownership and introduce
support facilities that will enhance the capability of low income
groups
to acquire decent housing.
CHAPTER
II
Home
Guaranty Corporation
Sec.
4. Home Guaranty Corporation.
— The Home Insurance and Guaranty Corporation is hereby renamed as the
Home Guaranty Corporation, hereinafter referred to as the Corporation,
which shall have its principal office in Metropolitan Manila and shall
exist for a period of fifty (50) years from December 15, 2000. The
Corporation
may establish such offices, agencies, subsidiaries or branches anywhere
in the Philippines as its operations would require and its Board of
Directors
would determine.chanrobles virtuallaw libraryred
Sec.
5. Corporate Powers and Functions.
— The Corporation, in addition to the regular powers and functions
provided
under Section 36 of the Corporation Code, shall have the following
powers
and functions, subject to the limitations hereinafter provided:
(a) To
promote homebuilding and land ownership, giving primary preference to
the
homeless and underprivileged sectors of the society;
(b) To
guaranty the payment in favor of any natural or juridical person, of
any
and all forms of mortgages, loans and other forms of credit facilities
and receivables arising from financial contracts exclusively for
residential
purposes and the necessary support facilities thereto;
(c) To
assist private developers to undertake socialized, low, and medium cost
mass housing projects by encouraging private funds to finance such
housing
projects through a viable system of long-term mortgages, guaranties and
other incentives;
(d) To
pursue the development and sustainability of a secondary mortgage
market
for housing as the primary strategy to encourage private sector
participation
in housing finance. The Corporation shall undertake such programs and
measures
using the guaranty cover as enhancement to encourage trading by the
public
in a secondary market for housing mortgages, bonds, debentures, notes
and
securities;
(e) To
underwrite, purchase, own, sell, mortgage or otherwise dispose of
stocks,
bonds, debentures, securities and other evidence of indebtedness issued
in connection with the powers enumerated in this Act: Provided, That,
it
shall not engage in direct mortgage lending activities;chan
robles virtual law library
(f) To
borrow money and/or to issue bonds, debentures, securities,
collaterals,
notes, and other obligations in local currencies with the approval of
the
President of the Philippines after consultation with the Monetary Board
of the Bangko Sentral ng Pilipinas, and in foreign currencies, here or
abroad, with the approval of the President of the Philippines in
consultation
with the Monetary Board of the Bangko Sentral ng Pilipinas and the
Secretary
of Finance, but in no case to exceed at any one time the aggregate
amount
of the principal obligations of all mortgages and accounts guaranteed
under
this Act. These bonds and other obligations shall be issued under such
terms and conditions as provided in this Act and the rules and
regulations
prescribed by the Corporation, and in such manner as may be stipulated
therein and shall bear such rate of interest as may be fixed by the
Corporation.
Such obligations shall be secured by the assets of the Corporation
including
the stocks, bonds, debentures and other securities underwritten,
purchased
or held by it under the provisions of this Act. Such obligations may be
issued and offered for sale at such price as the Corporation may
determine,
and shall be exempt from taxation as hereinafter provided as to
principal
and interest, except estate, inheritance, and gift taxes.chanrobles virtuallaw libraryred
Bonds
issued by the Corporation shall be registered at the request of the
holder
thereof under such rules and regulations as may be prescribed by the
Corporation;
(g) To
promote housing by the aided self-help method whereby families with
some
outside aid build their own houses with their own labor; to provide
technical
guidance to such families; to guaranty loans to such families on first
liens on house and land with such other security and conditions as the
Corporation shall determine, providing at least for ultimate recovery
of
principals; and to do all other activities as are relevant and
significant
in such a program of aided self-help for housing;
(h) To
adopt, alter, and use a corporate seal; to enter into contracts; and to
sue and be sued in any court of competent jurisdiction;
(i) To
acquire, purchase, own, hold, manage, administer, operate, develop,
lease,
pledge, mortgage, exchange, sell, transfer or otherwise dispose of, in
any manner permitted by law, real and personal property with every kind
and description, monies and funds, or any interests therein as may be
necessary
to carry out the purposes and objectives of the Corporation; and
(j) To
do any and all acts and things and to exercise all powers which may be
necessary or convenient to the accomplishment or furtherance of its
purposes
and objectives, or which a natural person can do and exercise and which
may now be or hereafter be authorized by law.
Sec.
6. Authorized Capital Stock.
— The Corporation shall have an authorized capital stock of Fifty
Billion
Pesos (P50,000,000,000.00), divided into Fifty Million (50,000,000)
shares
of common stock with a par value of One Thousand Pesos (P1,000.00) per
share.
Out
of the increase in its authorized capital stock of Forty-seven Billion
Five Hundred Million Pesos (P47,500,000,000.00), the amount of Seven
Billion
Five Hundred Million Pesos (P7,500,000,000.00) shall be subscribed and
paid in cash by the Government of the Republic of the Philippines upon
the approval of this Act, and accordingly the said amount of Seven
Billion
Five Hundred Million Pesos (P7,500,000,000.00) is hereby appropriated
out
of the funds of the National Treasury, not otherwise appropriated.
Succeeding
National Government equity to the Corporation shall be included in the
annual General Appropriations Act.
No
portion of the authorized capital stock of the Corporation shall accrue
to any agency or instrumentality of the National Government, including
government-owned or -controlled corporations.
Sec.
7. Use of Net Worth. — The use
of the net worth of the Corporation shall be subject to the following
limitations:
(a) At
least forty percent (40%) shall be allocated exclusively for socialized
housing, to be distributed equitably among all the regions, to the
extent
practicable;
(b) At
least thirty percent (30%) shall be allocated exclusively for low-cost
housing, to be distributed equitably among all the regions, to the
extent
practicable;
(c) At
least twenty percent (20%) shall be allocated exclusively for
medium-cost
housing, to be distributed equitably among all the regions, to the
extent
practicable; and
(d) Not
more than ten percent (10%) may be allocated for open housing.
Investments,
if any, by the Corporation in any establishment or enterprise, whether
public or private, shall be subject to the same limitation, herein
above
provided as well as those specified in Chapter III of this Act.
Sec.
8. Board of Directors. — The
Corporation shall be governed and its activities be directed,
controlled
and managed by a Board of Directors, hereinafter referred to as the
Board,
which shall be composed of seven (7) members, as follows:
(a) The
Secretary of the Department of Finance as the ex-officio Chairman;chanrobles virtuallaw libraryred
(b) The
Chairman of the Housing and Urban Development Coordinating Council
(HUDCC),
as the ex-officio Vice Chairman;
(c) The
Director General of the National Economic and Development Authority
(NEDA),
as ex-officio member;
(d) The
President of the Corporation, as member; and
(e) Three
(3) other members to be appointed by the President of the Philippines,
who shall serve for a term of five (5) years: Provided, That the person
appointed shall be of good moral character, of unquestionable
integrity,
of known probity and patriotism and with expertise and experience of at
least ten (10) years in business, finance and the professions:
Provided,
further, That in the event of vacancy, the successor appointed to fill
the same shall serve only the unexpired portion of the term of the
number
he succeeds to.
The
decisions of the Board shall be made by a vote of the majority of all
its
members.
The
Chairman of the Corporation shall preside over meetings of the Board of
Directors. The Vice Chairman of the Board shall assist the Chairman and
act in his stead in case of the latter's absence or incapacity.
The
Chairman, Vice Chairman, and the Members of the Board shall be entitled
to per diem for each meeting actually attended at such amount as may be
fixed by the Board in accordance with existing laws, rules and
regulations.
Sec.
9. Powers, Functions and Duties
of the Board of Directors. — The Board shall have the following powers,
functions and duties:
(a) To
adopt the by-laws of the Corporation and to revise or amend the same as
may be expedient;
(b) To
direct the management, operations and administration of the Corporation;
(c) To
authorize such expenditures by the Corporation as are in the interest
of
the effective administration and operations of the Corporation;chan
robles virtual law library
(d) To
formulate, revise or adjust periodically all policies, plans and
projects,
and to promulgate the necessary rules and regulations and manuals of
procedures
for the effective implementation of the provisions of this Act, in any
event to conform to the prevailing economic and financial conditions:
Provided,
That anything contained herein to the contrary notwithstanding, all
such
policies, rules and regulations, manuals of procedures, on ceilings and
limitations shall be subject to the concurrence of the Monetary Board
of
the Bangko Sentral ng Pilipinas;
(e) To
create offices or positions necessary for the efficient management,
operation
and administration of the Corporation: Provided, That all positions in
the Home Guaranty Corporation (HGC) shall be governed by a compensation
and position classification system and qualifications standards
approved
by the Corporation's Board of Directors based on a comprehensive job
analysis
and audit of actual duties and responsibilities: Provided, further,
That
the compensation plan shall be comparable with the prevailing
compensation
plans in the private sector and which shall be exempt from Republic Act
No. 6758, otherwise known as the Salary Standardization Law, and from
other
laws, rules and regulations on salaries and compensations; and to
establish
a Provident Fund and determine the Corporation's and the employee's
contributions
to the Fund; and
(f) To
exercise such other powers as may be necessary and proper for the
effective
enforcement of this Act and to accomplish the purposes for which the
Corporation
was organized; and to do and perform any and all acts and deeds as are
necessary and incidental to the attainment of the purposes of the
Corporation.
Sec.
10. President of the Corporation.
— The President of the Corporation shall be appointed by the President
of the Philippines for a term of five (5) years unless sooner removed
for
cause. He shall be a person of good moral character, of unquestionable
integrity, of known probity and patriotism, and with expertise and
experience
of at least ten (10) years in business, finance and the professions. He
shall receive such compensation, allowances and other emoluments as may
be determined by the Board.
Sec.
11. Powers and Duties of the
President. — The President shall have the following powers and duties:
(a) To
prepare the agenda for meetings of the Board, and to submit for its
consideration
the policies and measures which are necessary to carry out the purposes
and provisions of this Act;
(b) To
execute and administer the policies and measures approved by the Board;
(c) To
represent the Corporation in all dealings with other offices, agencies
and instrumentalities of the Government and with all persons and
entities,
public or private, domestic or foreign; and
(d) To
exercise such other powers, functions, and duties as may be delegated
by
the Board.
Sec.
12. Executive Vice President
and General Manager of the Corporation. — The Executive Vice President,
who shall be the General Manager of the Corporation, shall be appointed
by the Board of Directors. He shall act as President of the Corporation
in the latter's absence.
CHAPTER
III
Credit
Guaranty
Sec.
13. Requirements of Guaranty.
— To be eligible for credit guaranty, the account shall:
(a) For
developmental loans, involve a principal obligation not to exceed: (i)
seventy percent (70%) of the prudent production cost of the project for
bond guaranty coverage; and (ii) sixty percent (60%) of the prudent
production
cost of the project for cash guaranty coverage.
Such
obligations may cover the installation of improvements involving: (a) a
project by a developmental builder for the construction of not less
than
twenty (20) dwellings at one time under a single-mortgage with a
release
clause permitting the subsequent sale of each individual completed
house
together with land. Loans for advances of funds used for purchase of
materials
in anticipation of mass construction and standardization of parts may
be
guaranteed in the discretion of the Corporation; and (b) a rental
project
of at least twenty (20) units and involve a principal obligation,
including
such initial service charges, appraisal, inspection, and other fees as
the Corporation shall approve.
The
prudent production cost of the project shall be determined in
accordance
with the prevailing industry standards: Provided, That the builder
shall
submit certified bills of sale and other evidences of prudent
production
cost of the project and the Corporation shall be the sole judge of the
prudence of the expenditure as necessary to comply with the plans and
specifications.chanrobles virtuallaw libraryred
(b) For
single family residence, involve a principal obligation not to exceed:
(i) one hundred percent (100%) of the appraised value of the property
for
socialized housing packages; (ii) ninety percent (90%) of the appraised
value of the property for low-cost housing packages; (iii) eighty
percent
(80%) of the appraised value of the property for medium-cost housing
packages;
and (iv) seventy percent (70%) of the appraised value of the property
for
open housing packages.
The
Corporation as a matter of sound business policy may set downward
limits
on the total amount to be guaranteed for the aforestated programs which
limits may be adjusted to conform with the prevailing economic and
financial
conditions subject to the concurrence of the Monetary Board of the
Bangko
Sentral ng Pilipinas;
(c) Be
secured by a first lien on real estate or other rights in rem including
leasehold rights under a contract of lease for not less that twenty
(20)
years to run from the date the guaranty was executed, held by a
qualified
lender or trustee determined by the Corporation as responsible and able
to service the guaranteed account: Provided, That such mortgage rights,
or other rights in rem are duly annotated on the title to the real
estate;
or otherwise effectively protected;
(d) Be
intended for production and/or acquisition of residential lot or house
and lot, improvements, repairs and mass housing construction projects;
(e) Contain
complete amortization provisions satisfactory to the Corporation
requiring
periodic payments by the borrower not in excess of his reasonable
ability
to pay the loan which shall comply with the required loan to collateral
ratio as determined by the Corporation;
(f) Have
a maturity satisfactory to the Corporation but not to exceed thirty
(30)
years;
(g) Contain
such terms and provisions with respect to insurance, repair,
alterations,
payment of taxes, default, reserves, delinquency charges, foreclosure
proceedings,
anticipation of maturity, additional and secondary liens, and other
matters
as the Corporation may in its discretion prescribe; and
(h) Shall
involve real properties held by the following:chanrobles virtuallaw libraryred
(1) The
National Government, provincial, city, or municipal governments, or
government-owned
or controlled corporations and agencies;
(2) Private
corporations, banking institutions, trust companies, personal finance
companies,
mortgage companies, building and loan associations, savings and loan
associations,
installment lending companies, insurance companies, developmental
builders,
associations and cooperative societies which are legal agents of
owner-occupants,
or trusts formed or created for the purpose of rehabilitating slum or
blighted
areas, or providing housing for rent or sale, and which possess powers
necessary therefor and incidental thereto; and
(3) An
individual owner or joint-owners.
Sec.
14. Guaranty Premiums, Appraisal
Fees and Other Charges. — (a) The Corporation shall fix in accordance
with
sound actuarial practice and the risk characteristics involved, the
rates
of guaranty premiums to be imposed: Provided, however, That no guaranty
premium shall be fixed at less than one-half of one percent (1/2 of 1%)
of the amount of the outstanding principal obligation for socialized
housing;
three fourths of one percent (3/4 of 1%) for low-cost housing; one
percent
(1%) for medium-cost housing; and one and one-half percent (1.5%) for
open
housing. Such guaranty premiums shall be payable by the mortgagee or
guaranteed
entity, either in cash or in debentures issued by the Corporation at
its
present value, in such manner as may be prescribed by the Corporation.
In addition, the Corporation may charge and collect from the mortgagee
or guaranteed entity, such fees and amounts as may be reasonable to
implement
its guaranty programs.
(b) In
addition, the Corporation may fix, charge and collect such fees and
amounts
as may be reasonable for the appraisal of a property or project offered
for guaranty and may likewise charge and collect such fees and amounts
as may be reasonable for the inspection of such property or project
during
construction.
Sec.
15. Guaranty Coverage and Composition
of Guaranteed Accounts. — (a) The Corporation shall guarantee payment
of
the balance outstanding and due on the guaranteed principal obligation,
plus interest and yields thereon up to eleven percent (11%) per annum
for
socialized housing packages; ten percent (10%) per annum for low-cost
housing
packages; nine and one-half percent (9.5%) per annum for medium-cost
housing
packages; and eight and one-half percent (8.5%) per annum for open
housing
packages;
(b) The
Corporation shall guarantee accounts under this Act, as follows:
(1) At
least forty percent (40%) of guaranty accounts shall be allocated for
socialized
housing packages;
(2) At
least thirty percent (30%) of guaranty accounts shall be allocated for
low-cost housing packages;
(3) At
least twenty percent (20%) of guaranty accounts shall be allocated for
medium-cost housing packages; and
(4) Not
more than ten percent (10%) of guaranty accounts may be allocated for
open
housing packages.
For
the foregoing purpose, the respective ceilings for socialized,
low-cost,
medium-cost, and open housing shall be jointly determined by the
Housing
and Urban Development Coordinating Council and the National Economic
and
Development Authority: Provided, That at any time, but not more often
than
once every two (2) years, such ceilings may be reviewed or revised to
conform
to prevailing economic conditions.
(c) The
Corporation shall as much as possible and practicable, allocate its
guaranty
obligations fairly and equitably among all the regions of the country.chan
robles virtual law library
Sec.
16. Guaranty Limitations. — Any
and all guaranties issued by the Corporation shall be subject to the
following
limitations, anything to the contrary notwithstanding:
(a) The
extension of guaranty or guaranties for developmental projects for the
account of any one institution or entity shall not, at any time, exceed
three (3) times the net worth of such institution or entity;
(b) The
extension of guaranty shall not exempt banks and other financial
institutions
regulated by the Bangko Sentral ng Pilipinas from complying with the
pertinent
single borrowers limit as provided by the Monetary Board of the Bangko
Sentral ng Pilipinas;
(c) The
aggregate amount of the outstanding obligations shall not, at any time,
exceed twenty (20) times the capital and surplus of the Corporation;
(d) All
guaranteed bonds, debentures, commercial papers and other securities
issued
by individual persons which are sold to the public shall still be
subjects
to the registration requirements under the Revised Securities Act;
(e) The
Corporation shall set aside five percent (5%) of its annual net
operating
revenues before interests as reserve or sinking fund to answer for
guaranty
calls; and
(f) All
rules and regulations on ceilings and limitations under this Act shall
be subject to the concurrence of the Monetary Board of the Bangko
Sentral
ng Pilipinas.
Sec.
17. Payment of Guaranty Calls.
— (a) In the event of a default on the guaranteed obligation in
accordance
with the regulations of the Corporation, the guaranteed entity shall be
entitled to receive the benefit of the guaranty as herein provided,
upon
(1) the prompt conveyance to the Corporation of the right to the
property
securing the guaranteed obligations; and (2) the assignment to the
Corporation
of all claims to the mortgagee against the mortgagor under the
guaranteed
obligation. Upon such conveyance and assignment, the obligation of the
guaranteed entity to pay the premium charges for guaranty shall cease
and
the Corporation shall, at its option, pay in cash and/or issue to the
guaranteed
entity, debenture bonds equivalent to the guaranteed obligation;
(b) For
the purpose of the above subsection (a), the balance outstanding and
due
on the guaranteed mortgage shall be determined in accordance with the
rules
and regulations prescribed by the Corporation;
(c) Debentures
issued under this Section shall be subject to such terms and
conditions,
and shall include such provisions for redemption, if any, as may be
prescribed
by the Corporation, and may be in coupon or registered form;chanrobles virtuallaw libraryred
(d) Debentures
issued under this Section to any mortgagee with respect to mortgages or
loans guaranteed under Chapters III and IV shall be executed in the
name
of the Home Guaranty Corporation as obligor, and signed for the
Corporation
by the President of the Corporation, either by his written or engraved
signature, and shall be negotiable, exempt from taxation to the extent
specified in this Act, attachment, execution or seizure, redeemable at
the option of the Corporation at or before maturity and fully
guaranteed
as to principal and interest by the Republic of the Philippines. All
such
debentures shall be dated as of the date the mortgagee conveys and
assigns
to the Corporation its rights under the mortgage and valid claims
against
the mortgagor and shall bear interest not exceeding the interest rate
established
for the principal obligation. The interest on the debentures shall be
payable
semi-annually on the first day of January and the first day of July of
each year. The debentures shall mature ten (10) years after date on
which
the debentures were issued or three (3) years after July first
following
the maturity of the mortgage on the property in exchange for which the
debentures were issued whichever is the shorter period, and may be used
at the option of the mortgagee in the payment of guaranty premium due
the
Corporation;
(e) If
the net amount realized from the sale or disposition of any property
conveyed
to the Corporation under this Section and the claims assigned
therewith,
after deducting all expenses incurred by the Corporation in handling,
dealing
with, and disposing of such property and in collecting such claims,
exceeds
the face value of the debentures issued and the cash paid in exchange
for
such property plus all interest paid on such debentures, such excess
shall
be paid to the mortgagor of the property;
(f) The
aggregate amount at any time of all such debentures, securities, and
other
evidences of indebtedness issued under this Section, shall be
determined
by the Corporation with the approval of the President of the
Philippines
after consultation with the Monetary Board of the Bangko Sentral ng
Pilipinas,
which shall in no case exceed the aggregate amount of the outstanding
principal
obligations of all mortgages insured under this Act; and
(g) The
Corporation may, in accordance with the provisions of the mortgage, or
in the absence thereof, upon such terms and conditions as it may
prescribe,
release part or parts of the mortgaged property from the lien of the
mortgage.
Sec.
18. Guaranty of the Republic
of the Philippines. — (a) The Republic of the Philippines hereby fully
and unconditionally guaranties to payment by the Corporation both of
the
principal sums and interest of the bonds, debentures, collateral,
notes,
or other such obligations of the Corporation, issued or incurred by
virtue
of this Act and shall pay such principal sums and interest in the event
that the Corporation fails to do so: Provided, That such
guaranty
shall be expressed on the face of the certificate of indebtedness:
Provided,
further, That the aggregate amount of such bonds, debentures,
collateral,
notes or other such obligations of the Corporation does not exceed at
any
time, the limit prescribed under Section 5 (f) of this Act.
(b) The
Republic of the Philippines hereby fully and unconditionally guaranties
the guaranty obligations of the Corporation incurred in accordance with
this Act both as to principal, and as to interest up to eleven percent
(11%) for socialized housing, ten percent (10%) for low-cost housing,
nine
and one-half percent (9.5%) for medium-cost housing, and eight and
one-half
percent (8.5%) for open housing: Provided, That such guaranty shall be
expressed on the face of the debenture bonds: Provided, further, That
the
aggregate amount of the outstanding obligations shall not, at any time,
exceed twenty (20) times the capital and surplus of the Corporation.
The
Republic of the Philippines shall succeed to all the rights of the
holders
of such bonds, debentures, collateral, notes or other instruments to
the
extent of the payments made, unless the sums so paid by the Republic of
the Philippines shall be refunded by the Corporation within a
reasonable
time.
Sec.
19. Tax Exemption. — Interests
and yields earned or accumulated on mortgage, debentures, bonds, notes,
mortgage and asset-backed securities, interest under a lease, and other
credit instruments, whether issued by the Corporation or covered by its
guaranty in favor of natural or juridical person, in cash or in bonds,
shall be exempt from all taxation to the same extent provided in
Section
15 (a) hereof: Provided, however, That the Corporation shall have the
authority
to increase the limit of such exemption in such varying amounts as
shall
be reflective of the social concerns of the State: Provided, further,
That
the exercise of said authority shall be subject to the approval of the
President of the Philippines upon the recommendation of the Monetary
Board
of the Bangko Sentral ng Pilipinas: Provided, finally, That the
Corporation
shall not exercise such authority more often than once every five (5)
years.
CHAPTER
IV
Building
and Loan Associations
Sec.
20. Building and Loan Associations.
— (a) In order to encourage the accumulation of savings and the
financing
of homes through the local mutual thrift institutions, the Corporation
is authorized, under such rules and regulations as it may prescribe, to
issue contracts of guaranty for the accounts of such building and loan
associations in accordance with the best practices of known mutual
thrift
and home financing institutions.
(b) Whenever
guaranteed by the Corporation and where the loan is intended for
housing
development, such associations shall lend their funds only on the
security
of first liens upon real estate located within an area to be determined
by the Corporation.
(c) The
Corporation is authorized to subscribe for preferred shares in such
associations
which shall be preferred as to the assets of the association and which
shall be entitled to a dividend, if earned, after payment of expenses
and
provision for reasonable reserves, to the same extent as other
shareholders:
Provided, however, That no such subscription shall be made unless in
the
judgment of the Corporation the funds are necessary for the
encouragement
of reasonable local home financing in the community to be served. In
case
of the liquidation of any such association, the shares held by the
Corporation
shall be retired on the same basis as payments are made to other
shareholders
in accordance with existing laws.
(d) When
guaranteed by the Corporation, such associations including their
franchises,
capital, reserves, surplus, and their loans, receipts, and incomes,
shall
be exempt from all taxation now or hereafter imposed by the Government.
Sec.
21. Open-end Mortgages. — Notwithstanding
any other provisions of this Act, in connection with any mortgage
guaranteed
pursuant to any Section of this Act which covers a property upon which
there is located a dwelling designed for residential use, the
Corporation
is authorized, upon such terms and conditions as it may prescribe, to
guaranty
the amount of any advances for the improvement or repair of property
made
to the mortgagor pursuant to an "open-end" provision in the mortgage
and
to add the amount of such advance to the original principal obligation
in determining the value of the mortgage for the purpose of computing
the
amounts of debentures to which the mortgage may be entitled. The
Corporation
may require the payment of such charges, including charges in lieu of
guaranty
premiums, as it may consider appropriate for the guaranty of such
"open-end"
advances. Only advances for such improvements or repairs as will
substantially
protect or improve the basic liability or utility of the property
involved
shall be eligible for guaranty under this Section. No such advances
shall
be guaranteed under this Section if the amount thereof plus the amount
of the unpaid balance of the original principal obligation of the
mortgage
would exceed the amount of such original principal obligation unless
the
mortgagor certifies that the proceeds of such advance will be used to
finance
the construction of additional rooms or other enclosed space as part of
the dwelling. The guaranty of "open-end" advances shall not be taken
into
account in determining the aggregate amount of principal obligations of
mortgages which may be guaranteed under this Act.
Sec.
22. Investment of Funds. — Corporate
funds not needed for the current operations of the Corporation, shall
be
deposited with any government bank as may be approved by the Board, or
invested in bonds or other obligations guaranteed as to principal and
interest
by the Government. The Corporation may purchase in the open market
debentures
issued under the provisions of this Act which debentures shall be
cancelled
and not reissued.
CHAPTER
V
Miscellaneous
Provisions
Sec.
23. Definitions. — As used in
this Act, and unless the context otherwise requires, the term:
(a) "Bond
guaranty coverage" refers to the type of guaranty coverage which
entitles
the guaranteed entity to a claim payment in the form of debenture bonds
upon call on the guaranty;
(b) "Builder/Developer"
refers to the person or entity who develops raw land for housing;
(c) "Cash
guaranty coverage" refers to the type of guaranty coverage which
entitles
the guaranteed entity to cash payment upon call on the guaranty;
(d) "Developmental
loan" pertains to a type of loan the proceeds of which shall be used
for
housing subdivision development or construction of residential houses;
(e) "Guaranty
premium" refers to the fee to be charged by the Corporation for the
extension
of the guaranty;
(f) "Housing
finance" refers to the comprehensive funds flow system covering the
entire
housing provision cycle from identification of financial requirements,
fund sourcing for various aspects of housing program, such as lot
acquisition,
development and construction, to end-buyers financing;chan
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(g) "Maturity
date" means the date on which the mortgage indebtedness would be
extinguished
if paid in accordance with the periodic payments provided for in the
mortgage;
(h) "Mortgage"
shall mean a first mortgage on real state in fee simple, or on the
interest
of either the lessor or lessee thereof under a lease for not less than
twenty (20) years to run from the date the mortgage was executed, upon
which there is located or upon which there is to be constructed a
building
or buildings designed principally for residential use; and the term
"first
mortgage" means such classes of first liens as are commonly given to
secure
advances on, or the unpaid purchase price of, real estate, together
with
the credit instrument or instruments, if any, secured thereby, and may
be in the form of bonds, notes, stocks and mortgage and asset-backed
securities,
trust mortgages or mortgage indentures of deeds of trust securing
notes,
bonds, or other credit instruments;
(i) "Mortgagee"
shall mean the original lender under a mortgage, and its successors and
assigns, and includes the holders of bonds, notes, stocks, mortgage and
asset-backed securities, and other credit instruments issued under a
trust
mortgage or deed of trust pursuant to which such holders act by and
through
a trustee herein named;
(j) "Mortgagor"
shall mean the original borrower under a mortgage as defined herein,
and
its successors and assigns;
(k) "Net
worth" shall mean the paid-up capital plus fifty percent (50%) of the
retained
earnings of the Corporation.
(l) "Open
housing" refers to housing packages with cost above the medium-cost
packages
set in Section 15 of this Act but in no case costing more than Five
Million
Pesos (P5,000,000.00);
(m) "Prudent
production cost" of the project shall mean, with respect to the
relevant
project, the relevant cost of the builder of the proposed physical
improvements,
including buildings, utilities within the boundaries of the subject
property,
cost of land, architects' fees, taxes and interests accruing during
construction,
but not including builders' profit nor other charges, except for
estimated
depreciated cost of any existing utilities;
(n) "Rental
housing" shall mean housing, the occupancy of which is permitted by the
owner thereof in consideration of the payment of agreed charges,
whether
or not by the terms of the agreement, such payment over a period of
time
will entitle the occupant to the ownership of the premises;
(o) "Secondary
mortgage market" means a market where existing mortgages are sold to
and
bought by the public;
(p) "Single
family residence" means a type of residential structure designed to
include
one dwelling; and
(q) "Slum
or blighted area" shall mean any area where dwellings predominate
which,
by reason of dilapidation, overcrowding, faulty arrangement or design,
lack of ventilation, light or sanitation facilities, or any combination
of these factors, are detrimental to safety, health, or morals.
Sec.
24. Warranties of Developers/Builders,
Sellers, or Funders. — The Corporation shall require the guaranteed
sellers,
developers/builders, or funders, and such other person as may be
required
by the said Corporation to become warrantor, to deliver to the
purchaser
or owner of such property a warranty that the dwelling is constructed
in
substantial conformity with the plans and specifications on which the
Corporation
based its valuation of the dwelling. The Corporation shall deliver to
the
developer/builder, seller, or funder or other warrantor their written
approval
of any amendment of, or change or variation in, such plans and
specifications
which the Corporation deems to be a substantial amendment thereof, or
change
or variation therein, and shall file a copy of such written approval
with
such plans and specifications. Such warranty shall apply only with
respect
to such instances of substantial nonconformity to such approved plans
and
specifications as to which the purchaser or homeowner has given written
notice to the warrantor within two (2) years from the date of
conveyance
of title to, or initial occupancy of the dwelling, which ever first
occurs,
without prejudice to all other rights and privileges which such
purchaser
or owner may have under any other law or instrument. Any amendment of,
or change, or variation in, such plans and specifications shall be with
the prior written approval of the Corporation.
Sec.
25. Participation of Financing
Institutions and Other Investors. — (a) All banking institutions, trust
companies, personal finance companies, mortgage companies, building and
loan associations, savings and loan associations, installment lending
companies,
insurance companies, the GSIS, the SSS, the Development Bank of the
Philippines
(DBP), and other government financing institutions or other
government-owned
and -controlled corporations, are hereby authorized to invest part of
their
funds for the purpose of giving loans and advances of credit
contemplated
and provided in this Act, as well as on the purchases of obligations
representing
loans and advances of credit made pursuant to the provisions of this
Act,
any provision of their respective charters or by-laws to the contrary
notwithstanding.
All housing loans, within the loan ceiling fixed by the Corporation to
be granted by the foregoing government institutions shall be guaranteed
by the Corporation under the provisions of this Act.
All
mortgagee institutions participating in the mortgage guaranty programs
shall be bound by the terms and conditions for guaranteed mortgage
loans
as may be approved by the Corporation. Any amount invested by all the
foregoing
entities in the financing or mortgage loans for housing development
under
this Act, shall be guaranteed both as to principal and interest, as
herein
provided, by both the Corporation and the Government of the Republic of
the Philippines.
(b) The
aforementioned government financing institutions are hereby authorized
to constitute the secondary market for guaranteed mortgages and shall:
(1) Purchase,
service or sell mortgages which are guaranteed under the provisions of
this Act.
(2) Subject
to the approval of the Monetary Board of the Bangko Sentral ng
Pilipinas,
issue bonds, debentures, securities, collaterals and other obligations
against the security of mortgages guaranteed under this Act, in such
amount
and in such proportion to the face value of such mortgage as their
respective
boards may designate and such obligations may be issued and offered for
sale at such price or prices as the particular government institution
may
determine, and shall be negotiable and exempt from taxes both as to
principal
and interest, subject to Section 19 hereof.
Sec.
26. Powers Over Homeowners' Associations.
— The powers, authorities and responsibilities vested in the
Corporation
with respect to homeowners' associations under Republic Act No. 580, as
amended by Executive Order No. 535 is hereby transferred to the Housing
and Land Use Regulatory Board (HLURB).
Subject
to existing laws, the HLURB is hereby authorized to create additional
positions
and augment its present budget allocation as may be needed for the
operation
and maintenance of the newly-created unit or office as a consequence of
the transfer of functions and powers.
Pending
the approval of the HLURB's Revised Staffing and Organizational Plan
and
release of budgetary allocations therefore, the Corporation shall
extend
technical, operational and administrative assistance to the HLURB as
may
be mutually deemed necessary to ensure smooth turnover of functions.
However,
such assistance shall not extend beyond a period of one (1) year from
date
of effectivity of this Act.
Sec.
27. Penalties. — (a) Whoever,
for the purpose of obtaining any loan or advance of credit from any
person,
partnership, association, or corporation with the intent that such loan
or advance of credit shall be offered to or accepted by the Corporation
for guaranty, or for the purpose of credit, or mortgage guaranteed by
the
said Corporation, or the acceptance, release, or substitution of any
security
on such loan, advance of credit, or for the purpose of influencing in
any
way the action of the said Corporation under this Act, (1) makes,
passes,
utters, or publishes, or causes to be made, passed, uttered, or
published
any statement, knowing the same to be false, or (2) alters, forges, or
counterfeits, or causes or procures to be altered, forged, or
counterfeited,
any instrument, paper, or document, or (3) utters, publishes, or passes
as true or causes to be uttered, published or passed as true, any
instrument,
paper or documents, knowing it to have been altered, forged or
counterfeited,
or (4) willfully overvalues any security, asset, or income, shall be
punished
by a fine of not less than the amount of the loan or loans involved or
by imprisonment for not more than ten (10) years or both.chan
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(b) Whoever
(1) falsely makes, forges, or counterfeits any obligation or coupon, in
imitation of or purporting to be an obligation or coupon issued under
authority
of this Act, or (2) passes, utters, or publishes, or attempts to pass,
utter, or publish, any false, forged, or counterfeited obligation or
coupon
purporting to have been so issued knowing the same to be false, forged,
or counterfeited, or (3) falsely alters any obligation or coupon so
issued
or purporting to have been so issued, or (4) passes, utters, or
publishes,
or attempts to pass, utter, or publish, as true, any falsely altered or
spurious obligation or coupon, so issued or purporting to have been so
issued, knowing the same to be falsely altered or spurious shall be
punished
by a fine of not less than the amount of loan involved, or by
imprisonment
for not more than five (5) years, or both.
(c) Any
person (1) who willfully and knowingly makes, circulates, or transmits
to another or others any statement, or rumor written, printed or by
word
of mouth, which is untrue in fact and is directly or by inference
derogatory
to the financial condition or affects the solvency or financial
standing
of the Corporation, or (2) who knowingly counsels, aids, procures, or
induces
another to start, transmit, or circulate any such statement of rumor,
is
guilty of felony punishable by a fine of not less than the amount of
loan
involved or by imprisonment of not exceeding one year, or both.
Sec.
28. Fund Sources for Operation.
— The Bangko Sentral ng Pilipinas may extend to the Corporation
advances
which may be needed for its operations and/or grant loans secured by
any
assets which are defined as acceptable securities by the Monetary Board.
Sec.
29. Exemptions. — The Corporation
is exempt from the coverage of the regulations of Bangko Sentral ng
Pilipinas
governing quasi-banking functions.
Sec.
30. Legal Counsel. — The Office
of the Government Corporate Counsel shall be the General Counsel of the
Corporation.
Sec.
31. Resident Auditor. — The Resident
Auditor of the Corporation shall be appointed by the Chairman of the
Commission
on Audit, who shall also appoint and for cause, remove, upon the
recommendation
of the Resident Auditor, the personnel of the Auditing Office. The
Auditor
shall submit, through the Commission, an annual report on the financial
condition and the result of the operations of the Corporation to the
President
of the Republic of the Philippines, each member of the Senate and the
House
of Representatives, the National Economic and Development Authority and
the Chairman of the Commission on Audit.
Sec.
32. Reports. — The Corporation
shall submit a quarterly report to the President of the Philippines and
to each member of the Congress of the Philippines, within the first
forty-five
(45) days of the succeeding quarter, regarding its activities under
this
Act for the previous quarter.chan
robles virtual law library
Sec.
33. Transitory Provision. — Any
and all policies, guidelines, programs, ceilings and limits currently
in
effect with respect to the issuance of guaranty shall be submitted to
the
Monetary Board of the Bangko Sentral ng Pilipinas for concurrence
within
six (6) months after the effectivity of this Act.
Sec.
34. Report on the Development
of the Secondary Mortgage Marker. — The Housing and Urban Development
Coordinating
Council and the Corporation shall submit to the President of the
Philippines
and to Congress a program for the development of the secondary mortgage
market.
Sec.
35. Sunset Review. — Every year
after the effectivity of this Act, Congress shall conduct a sunset
review
which shall entail a systematic evaluation of the Corporation to
determine
whether or not its performance, impact or accomplishment with respect
to
its mandates merit its continued existence. Such review shall be
undertaken
by the Committee on Housing and Urban Development and the Committee on
Government Corporations and Public Enterprises of the Senate and the
Committee
on Housing and Urban Development and the Committee on Government
Enterprises
and Privatization of the House of Representatives which have
legislative
jurisdiction over the Corporation.
Sec.
36. Suppletory Application of
the Corporation Code. — The provisions of the Corporation Code shall
have
suppletory application in matters not provided in this Act.
Sec.
37. Implementing Rules and Regulations.
— The Corporation, with the Department of Finance, the Housing and
Urban
Development Coordinating Council, and the Department of Budget and
Management
shall promulgate the rules and regulations necessary for the
implementation
of and consistent with this Act.
Sec.
38. Repeal. — Republic Act Nos.
580, 1557 and 5488, and Executive Order No. 535 are hereby repealed.
The
provisions of Republic Act Nos. 6846, 7279 and 7835, and Executive
Order
No. 90 and all other laws, orders and proclamations, rules and
regulations,
or parts thereof, inconsistent with or contrary to the provisions of
this
Act or its purposes are hereby amended or modified accordingly.
Sec.
39. Separability Provisions.
— If for any reason, any provision of this Act, or the application
thereof
to any person or circumstances, is held invalid, the remaining
provisions
not affected thereby shall continue to be in full force and effect.
Sec.
40. Effectivity. — This Act shall
take effect fifteen (15) days after its publication in the Official
Gazette
or in at least two (2) newspapers of general circulation.
Approved:
March 7, 2000
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