The beginning of real estate brokerage

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By Roberto A. Capili

Real Estate Updates

Sunday, July 20, 2014


HOW did real estate brokerage start in the Philippines? Tracing the roots of the practice will give us an idea of how it came into existence. In earlier times, there were considerable real estate transactions that occurred, but little, if any involved the services of real estate middlemen.

Persons who acted as brokers did not realize that they were engaged as realty service practitioners but rather in the belief that as commercial agents, dealing with real estate was part of their business. So often dealing with commercial transactions involves both goods, products, commodities, services and real estate. There were no distinctions as to what products or services were carried by middlemen and commercial brokers. All they were doing was handling business on any commercial undertakings.

At the onset of World War I, that is around the mid-1910's, traces of commercial brokerage activities commenced when foreign businessmen and traders took special interest in business investments, including real estate, in the Philippines. Commonly, to start and set up their business ventures in our country, they have to acquire parcels of land to construct their factories or establish their trading stores. Apart from this, they also needed offices to conduct their business. From then on, real estate brokerage transactions spined-off and was further developed. It started initially with acquiring and selling as well as leasing real properties.

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Real Estate Brokerage as an organized calling or profession was pioneered in the Philippines in the early 1920's by Mr. Collin M. Hoskins, an American military serviceman of World War I who later turned to business.

He started acquiring pieces of land and other real properties for his own purpose, and eventually expanded to mediating the acquisition of properties by his business partners, associates and other merchants.

This practice was spawned by the demand for the professional and convenient services of objective and reliable middlemen who would negotiate the sale or lease of real estate properties for the buyers or lessees, thus bridging the gap to effectively bring about the "meeting of the minds" of the parties to their mutual convenience, protection and benefit.

Just before World War II in Pacific broke out, Mr. Hoskins on November 7, 1938 founded the Manila Board of Realtors and set up the drafting of the rules and regulations on brokerage called "Commerce Administrative Order No. 3-6, promulgated and adopted on July 29, 1939. This Code served as the guiding rules and regulations in the formal practice of real estate brokerage in the Philippines.

The Second World War and its aftermath took its toll on the growth and development of real estate practice and the real estate industry as a whole. The process of rebuilding and rehabilitating the ravages of destruction and normalizing business activities took quite some time to be accomplished. Together with this situation, the activities of real estate practitioners and real estate investments took its toll and were affected as well.

In 1960, the requirement on examination for licensing as a Real Estate Broker was imposed for the first time. This was embodied as part of the new provisions of the revised regulations under Commerce Administrative Code No. 60-1 dated April 28, 1960 promulgated by the then Bureau of Domestic Trade. Since then, many took interest in real estate business where hundreds and even thousands of examinees have trooped to various examination centers around the country to take the Brokers examinations conducted yearly or even twice a year in some urban testing centers like Manila and Cebu.

Prior to the passage of the new real estate law in 2009, the enabling law that covered the regulation of real estate practice was ACT NO. 2728 - Applicable Law on Real Estate Brokerage, which was later amended by ACT NOS. 3715 and 3969 and Executive Order No. 913. However, it was MINISTRY ORDER (M.O.) NO. 39, Series of 1985 that expanded the scope of the coverage of real estate practice that included not only the real estate brokers, but also real estate appraisers and real estate consultants.

M. O. No. 39 was the Administrative Order promulgated by then Ministry of Trade and Industry (now the Department of Trade and Industry - DTI) which expanded the Real Estate Brokerage Practice under ACT NO. 2728 and served as the enabling law that recognized the real estate practice and profession.

Republic Act No. 9646 (The Real Estate Service Act or RESA) authored by one of PAREB's Past National President, former Congressman Rodolfo G. Valencia twenty-six (26) years ago, has completely altered the real estate landscape. It took more than two decades for its approval resulting from continued politicking, in-fighting, lack of government support and non-priority/non-preferential status it had suffered from previous administrations.

On June 29, 2009, RESA, after much lobbying from many real estate associations and stakeholders was finally approved by President Gloria M. Arroyo and which signalled the start of professionalizing the real estate practice. Previous to the approval of RESA, the real estate practice was considered more as a trade, rather than a profession, being under the supervision and administration of DTI under its Bureau of Trade Regulation and Consumer Protection (BTRCP) as mandated by M.O. No. 39.

RESA took effect on July 30, 2009, fifteen (15) days after its publication in a major daily newspaper of general circulation in the Philippines. As a real estate practice being elevated to a profession, its affairs is now handled by a Professional Regulatory Board of Real Estate Service (PRB RES) or referred under the law as the Board. The Board is composed of long-time and experienced practitioners in real estate who are appointed by the President of the Philippines based on various qualifications and professional expertise. The Board is under the direct supervision and administrative control of the Professional Regulation Commission which is referred to as the Commission.

The Real Estate Brokerage in the Philippines had gone a long way since it started as a mere commercial agent dealing with real estate properties up to this time that about 20,000 practitioners swell the ranks of the realty profession with an additional requirement that for those future licensees, they will have to undergo a four-year course in college leading to a bachelor's degree in real estate and of course have to pass the licensure examination given by PRC for the purpose.

(For questions, comments, reactions, observations and updates, you can email be at bert_capili@yahoo.com)

Published in the Sun.Star Baguio newspaper on July 21, 2014.

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