WHEREAS, the government recognizes the need to rationalize the use of land particularly in urban areas to insure its optimum utilization for the welfare of the greatest number of people;

WHEREAS, it is the declared policy of government to promote the well being of the people by undertaking a program of development which shall establish communities where people can live with dignity in healthful environmental conditions;

WHEREAS, the Tondo Foreshore is the largest squatter and slum colony in the Greater Manila Area where people live in substandard conditions incompatible with the goals of the New Society;

WHEREAS, the government is determined to improve the quality of life of the people in the Tondo Foreshore by preparing and implementing a realistic, comprehensive, and integrated plan for its development;

WHEREAS, the government is aware that the land issue is central in the Tondo Foreshore Project whose resolution shall provide a meaningful and lasting solution to the situation in the project area;

WHEREAS, Republic Act 1597, as amended, and other related laws specifically governing land use in the Tondo Foreshore Area have been found unrealistic and inadequate to bring about a harmonious, meaningful and lasting solution to the squatter and slums problem long obtaining in the Tondo Foreshore area;

WHEREAS, the Tondo Foreshore Development Authority, and its legal successor, the National Housing Authority, have prepared a master plan for the Tondo Foreshore which provides for the upgrading of sites and services in the Tondo Foreshore and the development of Dagat-dagatan into a resettlement area with residential, commercial, and industrial components, the whole project now known as the Tondo Foreshore and Dagat-dagatan Urban Development Project;

WHEREAS, there is a need to prescribe a new and reaistic land tenure system for the Tondo Foreshore area and Dagat-dagatan resettlement site in order to effect the proper implementation of the physical and socio-economic development program therein;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution do hereby decree and order the following:

SECTION 1. The Tondo Foreshore and Dagat-dagatan Urban Development Project

The Tondo Foreshore and Dagat-dagatan Urban Development Project, hereinunder referred to as the "Project" for which the land tenure system prescribed by this Decree is applicable, shall comprise the Tondo Foreshore, Vitas, Dagat-dagatan and its adjacent areas which have been designated as "Planned Areas for New Development (PLAND)" with specific technical boundaries under Letter of Instruction 299 dated 29 July 1975 and over which the Tondo Foreshore Development Authority and its successor, the National Housing Authority hereinafter referred to as the "Authority", have general jurisdiction and control.

SEC. 2. Land Tenure System

The Land Tenure System prescribed for the Project shall consist of two modes of residential land ownership and disposition, to wit:

1. Freehold with restrictions
   
   Freehold with restrictions will be applied only to titled lots and claims with "vested rights" such as those with final Deeds of Sale, Agreements to sell, and other legal claims which may be honored by the Authority, provided, however, that owners of these legal rights may opt for leasehold with option to purchase arrangement.
   
   
2. Leasehold with or without the option to purchase
   
   Leasehold with option to purchase shall be applied to those lands which are untitled, vacant, unclaimed and without vested rights.

SEC. 3. Citizens' Committee

For the purposes of this Decree, a Citizens' Committee consisting of five (5) members shall be formed in each barangay within the Project Area to perform the following functions:

1. Process request for transfer of residential land rights and sub-letting of dwelling units and structure within the Project Area based on policies, rules and regulations of the Authority.
2. Submit to the Authority recommendations on such transfers and sub-letting for review and approval.

The Barangay Chairman in each barangay shall automatically be a member of the Citizens' Committee. The four (4) other members shall be elected for a term of one (1) year by the members of the barangay in a general meeting. The Authority in coordination with other government entities, specifically the Department of Local Government and Community Development shall prescribe and implement the necessary rules and regulations for the conduct of the barangay election. The members of the Citizens' Committee shall elect from among themselves a Chairman who shall convene the Committee to discuss business on hand.

SEC. 4. Freehold with Restrictions

The sale and/or disposition of land in the Project Area shall be subject to the following conditions:

1. Except by hereditary succession, land under freehold right shall not be transferred, alienated, conveyed, or otherwise disposed of by any mode to any person who does not meet the criteria (based on income, multiple ownership, conformance to law, etc.) to be set by the Authority and implemented by Citizens' Committee to be created under Section 9 of this decree whose recommendation on land transfer shall be subject to review and approval by the Authority.
2. The use, occupancy, and development of land shall be subject to the general regulations and control of the Authority according to its approved development plan.
3. Freehold land with the Project shall be assessed a fee covering development cost which fee shall be amortized on a perpetual basis.

SEC. 5. Leasehold with or without the Option to Purchase

The lease of land with option to purchase shall be subject to the following conditions:

1. Lease grants will be for a period of 25 years renewable for another 25 years at the option of the lessee. Anytime after a period of five years of continuous occupancy, and at the option of the lessee, the lessee may purchase the land at market value assessed at the time the application to purchase is submitted to the Authority. A specified percentage of the lease payments made up to the time of purchase shall be credited against the purchase price. After full payment, the leassee shall own the land with the restrictions provided for in Section 4 hereof annotated in the certificate of ownership and, the land tenure arrangement reverts to freehold with restrictions. The Authority shall determine the lease amount which shall cover all development costs and may contain a provision for a specified gradual increase over time.
2. The conditions imposed on the sale of land in the Project are likewise applicable on the lease of land. However, lease rights may be transferred or sold to another person any price agreed upon by the lessee and the transferee, provided that the Citizen's Committee shall approve the transfer and determine the qualifications of the transferee according to a prescribed criteria, whose recommendation shall be subject to review and approval by the Authority.

The rules and regulations to implement leasehold without option to purchase shall be prescribed by the Authority, provided that in its implementation the Citizen's Committee shall exercise its recommendatory powers specified in Section 3 of this decree subject to review and approval by the Authority.

SEC. 6. Sub-letting of Dwelling Units and Structures

Sub-letting of dwelling units and structures on lands under freehold and leasehold shall be subject to recommendation of the Citizen's Committee and approval of the Authority. It is understood that the Authority will not unreasonably withhold the approval of transfer of land to persons qualified under criteria referred to in Section 4.

SEC. 7. Commercial and Industrial lands

Commercial and Industrial lands shall be disposed of by sale and/or lease. The conditions of sale and lease shall be prescribed and implemented by the Authority.

SEC. 8. Payment of real property taxes

All lessees and holders of freehold titles shall pay normal real property taxes to the local government in return for normal service from the latter.

SEC. 9. Implementation and Administration

The Authority shall implement and administer the land tenure system in the project.

SEC. 10. Repealing Clause

Any provision of law, decree, executive orders, ordinances, rules and regulations inconsistent herewith are hereby repealed, amended and modified accordingly.

SEC. 11. Separability Clause

If for any reason, any section or provision of this Decree is declared to be unconstitutional or invalid, the other sections or provisions hereof, which are not affected thereby shall continue in full force and effect.

SEC. 12. Effectivity This Decree shall take effect immediately.

Done in the City of Manila, this 17th day of October, in the year of Our Lord, nineteen hundred and seventy-five.