SC rules real estate law constitutional

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THE Supreme Court (SC) has affirmed the constitutionality of the Real Estate Service Act (Resa), or Republic Act (RA) 9646, saying it does not violate the equal protection clause.

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In a full court decision, the High Tribunal denied the petition for review filed by Remman Enterprises Inc. (REI) and the Chamber of Real Estate and Builders’ Association (Creba), as it upheld the July 12, 2011, decision of a Manila Regional Trial Court (RTC).

The RTC dismissed the petitions of REI and Creba to declare as unconstitutional Sections 28(a), 29 and 32 of RA 9646.

Resa, which was signed into law by then-President Gloria Arroyo in June 2009, aims to professionalize the real estate service sector through a regulatory scheme that involves the licensing, registration and supervision of real estate practitioners in the Philippines.

On December 7, 2010, REI and Creba filed a case before a Manila RTC to declare as void and unconstitutional certain provisions of the law.

Section 28 or Resa exempts from its coverage natural and juridical persons dealing with their own property, and other persons such as receivers, trustees or assignees in insolvency or bankruptcy proceedings.

Real estate developers were specifically mentioned as also an exception.

The petitioners argued that the aforementioned provision violates the equal protection clause, because it unjustifiably treats real estate developers differently from those exempted persons who also own properties and desire to sell them.

Meantime, Section 29 or Resa requires as a condition precedent for all persons who will engage in acts constituting real estate service, including advertising in any manner one’s qualifications as a real estate service practitioner, compliance with licensure examination, and other registration requirements including the filing of a bond for real estate brokers and private appraisers.

Meanwhile, Section 32 of RA 9646 states that, “No partnership or corporation shall engage in the business of real estate service unless it is duly registered with the Securities and Exchange Commission [SEC], and the persons authorized to act for the partnership or corporation are all duly registered and licensed real estate brokers, appraisers or consultants, as the case may be. The partnership or corporation shall regularly submit a list of its real estate service practitioners to the commission and to the SEC as part of its annual reportorial requirements. There shall at least be one licensed real estate broker for every 20 accredited salespersons.”

The petitioners sought to also declare as unconstitutional the aforementioned provisions.
No violation of equal protection clause

But in its decision, the High Tribunal said that “RA No. 9646 does not violate equal protection clause.”

It also ruled that the petition of REI and Creba lacked merit, and that there was no justifiable controversy.

“Although the equal protection clause of the Constitution does not forbid classification, it is imperative that the classification should be based on real and substantial differences having reasonable relation to the subject of the particular legislation,” the ruling stated.

The High Tribunal also said in its ruling that there is nothing in Resa that repeals any provision of Presidential Decree (PD) 957, or The Subdivision and Condominium Buyers’ Protective Decree, which vested the National Housing Authority with exclusive jurisdiction to regulate the real estate trade and business.

“There is no conflict of jurisdiction because the HLURB [Housing and Land Use Regulatory Board] supervises only those real estate service practitioners engaged in the sale of subdivision lots and condominium projects, specifically for violations of the provisions of PD 957, and not the entire real estate service sector which is now under the regulatory powers of the PRBRES [Professional Regulatory Board of Real Estate Service],” the ruling stated.

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1 Comment

  1. OPEN MESSAGE TO BIR, DOF, and DOJ

    I am happy that the Supreme Court has declared the Real Estate Service Act (RESA) constitutional.

    Most of us who proudly call ourselves “self-employed” are, in reality, either unemployed or underemployed– meaning, we don’t actually make money because of government failure to protect our proprietary rights to practice as licensed professionals — especially for us Real Estate Brokers. Our supposed earnings are being stolen by the unlicensed practitioners. These unlicensed practitioners have already paid the taxes that we, the licensed ones, could have paid to BIR.

    We, licensed real estate brokers do care for government. In fact, we have a suggestion on how government can make huge money from these real estate tycoons who profiteered so much in engaging the services of the unlicensed practitioners.

    We suggest BIR to review the withholding tax remittance record of real estate developers and real estate marketing companies, and cross check the taxpayer’s names individually with the Professional Regulations Commission (PRC) record to determine if the income taxpayer earned commission as PRC licensed real estate agent (Broker or Salesperson). The DOJ may use the tax record as proof that a person practiced the profession and in fact received compensation (commission) without PRC license. By virtue of RESA, the government can collect a fine of P200,000 each count from the real estate tycoon who owns the company, plus P200,000 each count from the unlicensed practitioner. How much money are we talking about here that you can potentially gain from fines?

    This is huge because ninety-five (95) percent of real estate agents are unlicensed,hence, expect that you can get P400,000 fines from each count of the 95% of the condominiums, houses, and subdivision lots that got sold since January 2010.

    Those earnings and taxes could have been paid by us, the licensed ones, if they were not stolen by the unlicensed real estate agents. The real estate tycoons make a lot of money in engaging unlicensed real estate agents. The RESA-violation fine on the real estate tycoons is just a fraction of their ill-gotten wealth.

    Rltr® John R. Petalcorin
    Licensed Real Estate Broker
    Convenor, IPORESP.Org
    Founder, RealterSociety.Org