CODE OF ETHICS & RESPONSIBILITIES

FOR REAL ESTATE SERVICE PRACTITIONERS

Art. 1- Scope & Purview of the Code
The Real Estate Service Practice shall
embrace and include all natural and juridical
persons who are performing any act of
engaging in the practice of real
estate service shall be committed to the rules
and guidelines of business ethics and
corporate governance.
Art. 3
PROFESSIONAL RULES OF CONDUCT AND
PRACTICE
Art. 3, Sec. 1
RESPONSIBILITY TO THE GOVERNMENT
a) The practitioner should secure all
the necessary licenses, permits and
authority from the Commission and
other government agencies as may
be required by law, ordinance or rules
and regulations and comply with all
the requirements thereof.
b) The practitioner shall pay any and
all taxes, fees, dues, levies or charges
that the government may impose in
accordance with law, ordinances, or
rules and regulations.
(c) The practitioner should help, assist
and cooperate with the Commission
through PRBRES and all government
agencies and instrumentality in the
promotion, development and
conservation of lands and other
natural resources, its improvements
and rights and interests therein.
(d) The practitioner should not
encourage, abet, tolerate or
participate in the evasion or illegal
reduction in the payment of taxes,
fees, dues, levies, or charges that
may be imposed by the government.
(e) The practitioner should not offer or
agree to pay, to split or rebate any
professional fee or valuable
consideration, directly or indirectly
with any person who is not a
licensed RSP or to cooperate, assist or
endorse any transaction or engagement
of his/her professional services in

violation of any existing law, rule or

regulation.
(f) The practitioner shall indicate
his/her license number, PIC, PTR
number, AIPO receipt number, and
the date of issuance and the duration
of validity as indicated in the COR,
issued by the Commission in his/her
letterhead, dry seal, signboard,
billboard, advertisement and other
forms of published announcements
and/or advertisements relative to the
real estate service practice.
(g) Juridical persons must adhere to
the Code of Corporate Governance
promulgated by the SEC or other
government agency directly or
indirectly involved in the practice of
real estate profession.
Art. 3 Sec. 2 Responsibility to the Public
(a) The practitioner should be imbued
with a social responsibility and
conscience for he does not live by
himself and his family alone but he
is a part of the society with duties
and responsibilities for others in
society and the promotion of the
common good.
(b) The practitioner should ensure the
highest and best use of the land
and the equitable distribution of
ownership, irrespective of political
beliefs, cultural background, sect,
religion or class.
(c) The practitioner should keep
himself well informed to any
economic, financial market, laws,
other forces affecting real estate in
his community, city or province. The
practitioners shall be equipped
through continuous professional
education, study and raining with
the ability to contribute in positive
way, advocacy in public affairs,
concerns or issues in areas of real
estate economics, finance, laws,
taxation, land use, city planning and
other programs of the government
for the development of the society
and the nation.

(d) The practitioner should cooperate

with the government in protecting
the public against deceptive, unfair
and unconscionable acts and
malpractices of some unscrupulous
or unlicensed/unauthorized real
estate service practitioners like
deception, fraud, misrepresentation
or concealment of relevant
information and other related
unethical; and immoral practices.
(e) The practitioner should ascertain in
truth all pertinent facts concerning
every property and avoid error,
exaggeration, misrepresentation or
concealment of pertinent
information with transparency,
accuracy and accountability.
(f) The practitioner should not be
instrumental in introducing in a
community or neighborhood factors
that may contribute to improper
land use, which will tend to impair
or erode property values, degrade
the neighborhood or add to
community deterioration and its
environs.
(g) The practitioner should not be a
party to the naming of a false
consideration in a deed or any other
instrument.
(h) The practitioner should in full
honesty keep a special bank account
separate and distinct from the
funds, all monies received in trust
for other persons, such deposit in
escrow, trust funds , clients money
and similar items.
(i) In advertisements, press releases,
brochures or announcements, the
practitioner should present a true
picture of the property, its
improvements, or rights and
interests including liens and
encumbrances if any, and should
indicate his name, firm name,
address and license number of the
COR issued by the PRC and in
accordance with the IRR of RA 9646.
In case of real estate sales person,
he should indicate the name, firm

name, and license number of the

real estate broker under whom he is
authorized.
Appraisers and/or consultants that
are fully employed by juridical
persons shall not engage in
moonlighting, sub-contracting,
malpractice, unethical practice of
acting as a dummy, or reveal any
confidential, classified corporate
information detrimental to the trust
and confidence of clients or
customers.
(j) The practitioner should see to it
that all agreement, terms and
conditions and commitments in real
estate transactions are in writing,
duly signed by all parties
concerned, and if necessary, to be
properly authenticated by a Notary
Public.
Art. 3, Sec 3
RESPONSIBILITY TO THE CLIENTS
(a) The practitioner, in accepting an
appointment or authority to act
and in behalf of a client should
pledge himself with prudence,
integrity and utmost
loyalty,
fidelity and good faith to protect
and promote the interest of his
client without, in any manner,
sacrificing the legitimate interest
of the other party in the
transaction and not contrary to the
law, good morals and the common
good.
(b) The practitioner for the service of
the client shall attend
conscientiously with the spirit of
responsibility the CPD. Aware of
the need to study, educate and be
informed for the sake of fairness to
the client who entrusted the
practitioner with confidential,
private or privilege information
that requires commitment of
discretion. The practitioner should
endeavor to be well-informed of
current legislations, policies and
programs of the government

including proposed legislations

which may affect the interest of
his/her client.
(c) The practitioner shall not accept
any professional fee or any
valuable consideration from any
party in any transaction except
from his client unless with the full
knowledge and consent of all the
parties in the transaction. He/she
shall not introduce or work for an
overprice from the client, except
the usual agreed rate of
professional fee on any real estate
transactions.
(d) The practitioner shall charge or
collect standard professional fees
which are fair and reasonable in
accordance with local industry
practice in similar transactions.
(e) The practitioner shall not advertise
any property without written
authority and in any offering, the
price quoted should be in
accordance with the price agreed
with owners as the offering price.
(f) In the event that more than one
formal offer on a specific property
is made before the owner has
accepted the proposal, all written
offers should be presented to the
owner for his decision.
(g) The practitioner shall endeavor to
make his client and customer
conclude a fair contract
advantageous to both and all
parties concerned,
(h) The practitioner shall assist the
customer acquire possession and
ownership of the property bought
in accordance with the terms and
conditions agreed upon.
(i) In case the practitioner is called
upon to act as witness in a court
proceeding he should give his
testimonies in the most unbiased,
honest, truthful and professional
manner.
(j) As Appraiser and/or Consultant, the
RSP must undertake all consulting
engagements in a conduct that is

legal, ethical and moral. He/ she

shall act as a disinterested third
party in rendering an unbiased
appraissal/consulting service and
must perform engagements with
impartiality, objectivity with
independence and without
accomodation of personal interests.
He/she is required to avoid any
action that could be considered
misleading or fraudulent or to
knowingly permit an employee or
other person to communicate a
misleading or fraudulent report.
(k) As appraiser and/or consultant, the
RSP should not render and
opinion/study without a careful
and thorough analysis and
interpretation of all factors
affecting the value of the property.
The RSP counsel and advice
constitutes a professional service
for which he should make a fair and
reasonable charge.
(l) As Appraiser &/or Consultant, the
practitioner shall not undertake to
make an appraisal or render an
opinion/study that is outside the
field of his experience and
competence unless he obtains the
assistance of another practitioner
familiar with such type of property
or unless the facts are fully
disclosed by the client.
(m) As Appraiser &/or Consultant,
the Practitioner must protect the
confidential nature of the
appraiser-client relationship,
particularly obtained from a client
or the result of an engagement. An
Appraiser &/or must not disclose
such confidential factual data to
any one other than: (1) the client
and the persons authorized by the
client; (2) such 3rd parties
authorized by due process of law;
(3) a duly authorized peer
reviewer. It is unethical for a
member of duly authorized
professional peer reviewer to
disclose confidential information.

(n) As Appraiser &/or Consultant, it is

unethical to accept compensation
that is contingent upon the
reporting of a predetermined result
or a direction that favors the cause
of the client, the attainment of a
stipulated result, or the occurrence
of a subsequent event. The
restriction of contingent
compensation apply to consulting
services on a professional basis for
a fee, and where the consultant is
acting in a disinterested manner
and would reasonably be perceived
as performing a service that
requires impartiality. Bribery, and
the giving of gratuity, undisclosed
commissions or anything of value in
exchange for the procurement of
appraisal/consulting engagement is
unethical.
(o) A Practitioner must prepare and
preserve written records of the
transaction or engagements (work
file) including reports and keep
such records for a period of at least
5 years after the date of the report
or at least 2 years after final
disposition of any juridical
proceedings in which testimony was
given whichever period expires
last.
(p) As an Appraiser/Consultant, as
engagement compensation the
Practitioner must charge
professional fees established by
industry practice and not as a
commission, or a percentage fee
contingent to the value of the
subject property.
(q) The Appraiser/Consultant must not
have any interest whatsoever on
the property appraise or the value
reported. Juridical persons such as
corporations, partnerships, or
organization engage in real estate
service practice shall have as
Chairman, President, CEO, majority
of the members of the board and
managers with necessary
professional license issued by PRC.

(r) The Appraisal/Consultant shall not

compromise and endanger ones
professional work by delegating it
task, job, duties and
responsibilities to a non-license
employee, contractor,
apprentice/trainee or the like, the
duty of ocular inspection,
computation of valuation, data
gathering and report writing.
Art. 3,Sec. 4
Responsibility to Fellow Practitioner
(a) The REB shall not solicit a listing that is
currently listed exclusively with
another REB unless the exclusive listing
agreement has expired or revoke by the
client and the latter offers the same to
a new REB without soliciting it or use
other unethical means to attain or
acquire the said agreement.
(b) When the REB accepts a listing
agreement from the listing broker, the
agreement shall be respected until it
has expired. When a listing has come to
the attention of the accepting REB
from a different source, or when the
client, without solicitation offers the
listing to the accepting broker, such
listing should not be passed to a third
broker via electronic mail, SMS or
published in a daily newspaper without
the knowledge and consent of the
listing broker.
(c) Advertising with signage giving notice
of a property for sale, rent, lease or
exchange should not be placed on any
property by more than one broker and
only if authorized by the owner.
(d) The Practitioner shall not use
documents, data and information, lot
plans, drawings or studies obtained by
him from a listing broker through offers
to cooperate, received through
multiple listing, or other sources
authorised by the listing broker for the
purpose o creating a referral to a third
broker unless such use is authorised by
the listing broker.
(e) The Practitioner shall cooperate with
other brokers on property listed and

justly share the commission as

prescribe by ones organization &/or
industry practice. Professional fees or
valuable consideration maybe agreed
upon that is justly fair and beneficial to
all parties concern. Negotiations
concerning property listed exclusively
with one broker should be carried with
the listing broker and not the owner,
except with the consent of the listing
broker.
(f) The Practitioner shall not solicit or use
the services of an officer, broker,
employee or salespersons of other
practitioner without the knowledge of
the employer. Pirating from fellow
practitioners is unethical and
discouraged.
(g) The Practitioner shall not engage in
slander, oral defamation, gossip or
criticize publicly practitioner &/or
competitor nor volunteer a negative
and damaging opinions of a competitor
&/or fellow practitioner. If ones
opinion is essentially sought for
common good one should render
judgment with discretion, prudence,
truth with professional integrity,
courtesy and respect to a fellow
practitioner safeguarding their human
rights and good name.
(h) The Practitioner shall not seek unjust
and unfair advantage over his fellow
practitioners by organizing or sowing
discord, spreading and bad mouthing
against other practitioners particularly
officers and members of their
associations or APO (Philres).
(i) The Practitioner shall willingly share,
contribute, write and publish articles
for the benefit of fellow practitioners
for the good of the real estate industry
by imparting their knowledge,
technical training and experiences,
studies or research without prejudice
to classified or confidential information
from clients or customers govern by
good governance or silence of office.
(j) The Practitioner shall conduct his
professional practice with honor and
dignity to avoid any controversy with

his fellow practitioners. In the event of

a controversy between practitioners
belonging to the Accredited
Professional Organization (APO)
(PHILRES), such controversy should be
submitted for arbitration to the said
APO whose decision, if accepted by
both parties, will be binding. If the
APO cannot settle the controversy, the
Commission through the Board shall
assume jurisdiction over said
controversy in accordance to Sec. 5 of
the Act.
(k) In case a complaint is filed against a
practitioner for immoral, unethical or
unfair practice, he/she shall voluntarily
submit all pertinent facts before the
APO &/or PEBRES.
Art. 3, Sec. 5
RESPONSIBILITY TO THE ACCREDITED
PROFESSIONAL ORGANIZATION (APO)
(a) In the interest of the general public
and his own profession, calling or
occupation, the practitioner should
abide by the Articles and By-Laws of
the APO to which the professional shall
abide by Sec. 34 of R.A. 9646.
(b) Elections as trustees, officers, or board
members of the governing body of the
APO must be carried out with a
commitment to moral integrity with
obligation to serve with a sense of
responsibility , honorably, unselfishly,
diligently and efficiently. It should be
subject self interest, undue use of
force or authority, of election
campaigning or use of electronic mails,
letters, SMS or circulars announcing
ones candidacy or appealing for votes
for himself or other nominees or
candidates or other forms of
electioneering agreement for any act
which will interfere with the free and
wise choice of the officers and
members of the APO, the real estate
industry, society and the Philippine
economy.
(c) The Practitioner should commit under
oath to support the APO and their
corresponding organization financially

and actively participate with its plans,

programs and projects for the benefit
of all the members of the APO, the real
estate industry, society and the
Philippine economy.
(d) Any practitioner should first exhaust all
responsible, moral administrative
remedies with discretion and wise
judgment available under existing laws,
rules and regulations before taking any
judicial or quasi-judicial action.
Art. 4
THE PRACTITIONER AS A PERSON
Art. 4 Sec. 1
The Practitioner shall live and act with dignity
at all times. Respecting the dignity of human
person for the good of humanity.
Art. 4, Sec. 2
The Practitioner shall practice self-respect,
selflessness and discipline as the basic
principle of professionalism and ones
behavior and relationship with others.
Art. 4, Sec. 3
The Practitioner recognizes Almighty God or
Supreme Being as his own Creator and Guide
for his own destiny and reason for living food
moral life and exemplary conduct or behavior.
Art. 5
SANCTIONS AND FINAL PROVISIONS
Violation of any provisions of the Code shall
give rise to any sanction that may be imposed
by AIPO or the organization to which the
practitioner belongs as a member , without
prejudice to disciplinary action that the PRC
upon the recommendation of the PRBRES may
deem expedient thereon on the proper
complaint against the erring practitioner or
juridical person such as corporations,
partnerships or organizations for alleged
misconduct is filed with the PRC in
accordance with existing rules and
regulations. In the case of practitioners who
are not members of any organizations, any
complaint against them shall be governed by
existing laws, rules and regulations governing
controversies.

REAL ESTATE ECONOMICS

ECONOMICS
Is a social science that deals with mans
effort to satisfy his wants with the use
of resources that are scarce with
alternative uses. It is the application of
economic theories and techniques to
real estate market. It describes ,
predicts the changing pattern of prices,
supply and demand.
REAL ESTATE MARKET
Real Estate Market is an abstraction of the
factors influencing it tend to operate and the
payment consideration is manifested by
transfer of rights rather than movement of
the property. Unlike consumer good market,
real estate market has no physical market
place. Its fixity or immobility makes consumer
go to real estate, rather than real estate go to
consumer.
TYPES OF REAL ESTATE MARKET
1. Sellers market
A situation where there are many
buyers and there are few sellers of real
estate in a particular place and time
which tends to push up its price.
2. Buyers market
A situation where there are many
sellers and there are few buyers of real
estate in a particular place and time
which tend to pull down its price.
ECONOMIC SIGNIFICANCE OF REAL ESTATE
1. High multiplier effect.
2. Universal in need.
3. Hedge against inflation.
4. Preferred loan collateral.
5. Generally, it appreciates in value.
PLAYERS OF REAL ESTATE MARKET
1. OWNER/USER- purchase the real estate as
an investment and also to live in or utilize as
a business.
2. OWNER/INVESTOR - purchase the real
estate with the intention renting it out, lease
it to someone or sell it in the future at a
profit.
3. RENTER/LESSORS- are users of real estate
for a fee (rent).

4. DEVELOPERS - acquire land and transform

it into real estate products.
5. FACILITATORS - real estate service
practitioners and financial institutions that
facilitate the purchase, sale, lease and
mortgage of property.
CHARACTERISTICS OF REAL ESTATE
1. DURABLE - exist for long periods of time.
2. HETEROGENOUS - every property is unique.
3. FIXITY OR IMMOVABLE - there is no
physical market place. Consumers come to
good, rather than the good come to
consumers.
4. LONG GESTATION PERIOD - it takes time to
design, construct, finance, market and deliver
the product.
5. HIGH TRANSACTION COST - acquiring real
estate usually cost more than most type of
transactions which include:
1. Search cost
2. Transfer cost (cost of registration)
3. Documentary cost
4. Legal fees
5. Move-in fees
CLASSIFICATION OF REAL ESTATE
1. AS TO PURPOSE
a. residential
b. commercial
c. industrial
d. agricultural
e. institutional
f. recreational
g. trade related properties
h. reclamation
i. memorial
2. AS TO TYPE
a. horizontal
1. row house
2. townhouse
3. single-attached
4. single detached
b. vertical
1. medium-rise
2. high-rise
3. AS TO COST
a. socialized
b. economic
c. low-cost
d. middle end
e. high end or open market

PRINCIPLE OF DEMAND
LAW OF DEMAND
The quantity consumed increases as price
falls, on the other hand, quantity
consumed decreases as price rises. The
quantity demanded varies inversely with
price.
DEMAND DEFINED
A schedule of the quantities of goods and
services that would be bought at a
schedule of prices at a given time.
DEMAND FOR REAL ESTATE
A schedule of real estate products that will
be purchased from the market given a
schedule of quantities and corresponding
prices at a given time.
DETERMINANTS OF DEMAND
FOR REAL ESTATE
1. PRICE
2. INCOME
3. COST OF MONEY & AVAILABILITY
OF CREDIT
4. CONSUMER PREFERENCES
5. PRICE OF SUBSTITUTES/COMPLEMENTS
6. DEMOGRAPHIC FACTORS
DEMOGRAPHIC FACTORS
1. Population size
2. Population growth
3. Family size
4. Age composition
5. Birth rate
6. Death rate
PRINCIPLE OF SUPPLY
LAW OF SUPPLY - A schedule of the
quantities of good that will be offered for
sale at various prices. As the price rises,
more good will be offered for sale and as
the price falls, less good will offered for
sale.
The quantity of good for sale is positively
related to price.
DETERMINANTS OF SUPPLY
1. PRICE
2. COST
3. TECHNOLOGY

REAL ESTATE SUPPLY

REAL ESTATE SUPPLY the schedule of real
estate products which will enter into
particular uses in response to a certain
price, time and place.
KINDS OF REAL ESTATE
SUPPLY
1. POTENTIAL real estate units that
possibly be used for any purpose,e.g. total
supply of real estate in the Philippines =
7,091 islands or 29,741,290 hectares.
2. ACTUAL includes land currently
utilized for various purposes.
SUPPLY OF HOUSING
It is produced combining land, labor and
capital. It is determined by the costs of
these factors, price of the existing
inventory and the technology employed.
Estimated/Average Percentage Costs:
- acquisition cost .. 10
- site development. 11
- labor cost.. 25
- materials cost.. 28
- finance cost . 3
- administrative.. 13
- marketing cost. 10
ECONOMIC PRINCIPLES AFFECTING
PROPERTY VALUES
Principle of Supply and Demand
The factors affecting demand and supply
give rise to scarcity and abundance of
supply. Desires for the product, per se, is
not enough. It must be backed up by by
money votes or purchasing power
(effective demand).
Principle of Substitution
The value of the property is influenced by
the replaceable or equally desirable
substitute property. The ceiling price
is usually based on the cost of developing
or constructiing a comparable property.
Principle of Progression states that the
property of lesser price is pulled up by the
proximity of the more high-priced
property.
Principle of Regression states that the
property of higher price is pulled down by
the proximity of the low-priced property.

Principle of Conformity the property

stays within the standards of the
surrounding houses particularly in terms of
age, size, style and condition.
Principle of Anticipation value is
determined on the anticipated net income
from the property and/or margin from
resale.
Competition Competition will benefit the
buyers because it will tend to peg prices of
real estate by making it affordable.
Change Changes in technology, social
patterns, demographic changes, tastes and
preferences. Neighborhood go through a
life cycle growth, maturity, decline,
blight and renewal.
Increasing and Decreasing Returns
Development of a land is up to certain
point, beyond which profit decreases.
Highest and Best Use
The best use in the face of alternative uses
that a piece of real estate can be utilized
or developed and the maximum price that
it can be sold by a willing seller and a
willing buyer without any pressure or
duress on both. Both buyer and seller
have full information on the interest and
attributes of the property.
INDICATORS OF ECONOMIC ACTIVITIES IN
THE REAL ESTATE MARKET
1. Registered sales
2. Foreclosures
3. Consolidations
4. Selling price vs. Index price
5. Vacancies
6. Construction volume
REAL ESTATE BUBBLE
is a business phenomenon that always
threatens a business cycle experiencing
rapid growth. It is a situation where real
values of real estate is characterized by a
rapid increases to unsustainable levels and
then follows by rapid decline.
If real estate bubble will surface in the
Philippines, what housing category this
might be? Are we prepared for this?

Are there any countermeasures the

government initiated to lessen the risk of
real estate bubble?
1. Low interest rate is pushing up real
estate lending and this is a probable
source of risk. Competing developers
and lenders will relax lending
requirements beyond unreasonable
levels. To lessen the risk, on
September 2012, the BSP has limited
the coverage of bank exposure to real
estate lending by issuing a cap of 20%
on real estate exposure.
2. On July 19, 2014, the BSP requires that
banks must undergo real estate stress
test (REST) by requiring them to meet a
10% capital adequacy ratio (CAR) to
ensure that banks are holding enough
capital to be able to absorb the credit
risks from real estate exposure.
3. On October 2014, the collateral value
of real estate mortgage is capped at
60% of the appraised value in order for
the bank to focus better capital and
risk management
First Challenge Confronting the
Philippine Economy
A paradox, however, continue to haunt the
policymakers and implementors in the
Philippines, that is, high unemployment
in the midst high economic growth.
What caused this paradox? How can the
stellar performance of the economy in the
last 2 years be translated into jobs and
poverty reduction?
Can the stellar performance of the
Philippine economy in the last two year be
sustained?

Currently, the following can be surmised:

Agriculture employs more than 1/3 or 33%
of the working force, yet its contribution
to GDP is roughly 11%. This implies that
agriculture is a poor employer.
Industry which include manufacturing,
mining and quarrying and provide
better opportunities than agriculture. If
the industry sector can be opened up,
mining for example, it can absorb workers
from agriculture which provides higher
remuneration.
Another possibility is embark to attract
foreign manufacturers to set up shop in
the in the Philippines. Manufacturing
sector is known as job generators providing
higher income. But then, to attract foreign
investors, the Philippines policymakers
have to wrestle with the following
variables which affect their decisions to
invest:
Adequate infrastructure
Skills levels (Human capital)
Regulatory framework
Rules of the game.
Fiscal determination
Graft and corruption
Power supply
Second Challenge Confronting the
Philippine Economy
The recent decision of the Supreme Court
finding the Disbursement Acceleration
Program (DAP) unconstitutional put in
doubt the sustainability of the stellar
performance of the economy in the last
two years.