Owning Property in the PI

http://www.census.gov.ph/index.html
http://www.census.gov.ph/data/civilreg/civapfaq.html  

Owning Property By Foreigners

Every foreigner who has tried to buy property or just wanted to open a bank account in the Philippines has received a somewhat nasty surprise: It not allowed for foreigners to own something in the Philippines, if not a Filipino partner is available as well. Basically this means that either both share the property with equal rights, or the Filipino owns 51% or more, and the foreigner owns 49 % and less. 

Ok, so you think that this is not a major problem? You are married to your beautiful Filipina wife, and that solves the problem of the Filipino participation anyway. Well, be warned. Divorce may not be permitted in the Philippines, but there it is allowed in most other countries. So if you happen to split with your wife, and you did not provide for some method to guarantee your property, you might loose it. 

So what can you do? You can arrange for an additional contract certified by a lawyer that guarantees that your partner will never be able to do anything with her/his part of the property without your explicit consent. You paid 100 percent anyway, so that kind of contract is quite normal in the Philippines.

Owning of houses or buildings is possible as well, as long as the foreigner does not own the land on which the house is build. The land though can be leased by the foreigner on a long-term contract, and the house can be legally his.  

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Owning property by former Filipinos

Now for a different issue. You are a Filipina, and you have managed to buy some land in your home country, and you have secured the life of your family on that piece of land. Now you have decided to change your citizenship to that of the country where you are living. The advantages are clear: No more travel tax for your trips to the Philippines, and no more visa requirements when you travel around the world. But what happens to your property? Now you cannot own it anymore?

Well, you are lucky. Sometimes the Philippine government actually does something right. All of the property that you owned in the Philippines before you gave up your Philippine citizenship you can keep without any problems. You can even buy property within limits as a former Philippine citizen. There is only one drawback. As a former Filipino you can only buy additional property up to the limits mentioned below. So if you already own more than 1000 sqm of land for housing, there is no possibility to buy any more land.  

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General Rules of Holding or owning Real Estate

1. General Rule – only Filipino citizens and corporations at least sixty percent of the capital of which is owned by Filipino are entitled to acquire and own land in the Philippines.
2. 2. Exceptions to General Rule – Alien acquisition of real estate in the Philippines is allowed in the following cases:

a)      Acquisition before the 1935 Constitution;

b)      Acquisition thru hereditary succession if the alien acquires is a legal heir.

c)      Purchase of not more than forty percent interest in a condominium project.

d)      Purchase by former natural-born Filipino citizens subject to the limitations prescribed by law (Batas Pambansa 185 and R.A. 8179).

3. A Filipino who marries an alien retains her Philippine citizenship (unless by her act or omission she is deemed to have renounced Philippine citizenship), and may therefore acquire real estate in the Philippines.

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Erstwhile Filipino Citizens' Reacquisition of Rights and Privileges of 2001

An act allowing natural-born citizen as the Philippines who have lost their Filipino citizenship to retail certain rights and privileges, subject to certain constitutional limitations and for other purposes.

This act was proposed and passed in the Philippine government in 2004, so it is valid law.

(HB00081,HB00330,HB01238,HB01771,HB02531,HB03369,HB03370). The idea in this proposals is to make certain privileges available to former natural born Filipinos. The above mentioned proposal allows former Filipinos to:

·         Operation of Rural Banks

·         Engaging in retail business

·         Operation of overseas shipping

·         Engaging in the rice and corn industry

·         Private employment without need of any government permit

·         Engaging in the tax-free industries

·         Contracts for supply for the government

·         Engaging in the brokerage business

·         Practice of certain profession

As soon as there are changes in the Philippine law, this page will be updated to reflect the new changes.

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The Law

Just read the following official statements:

The Laws on Land Ownership by former Filipinos

Article XII, Section 8, of the Philippine Constitution provides that a natural born citizens of the Philippines who has lost his or her Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.
Section 7 of the same Article entitles former Filipinos to own and acquire lands through hereditary succession, i.e. by virtue of inheritance.

The laws on land ownership by natural-born Filipinos who have lost their Philippine citizenship are governed by Batas Pambansa Blg. 185 (BP 185), which was enacted in March 1982, and Republic Act 8179 (RA 8179), which amended the Foreign Investment Act of 1991. The following are the provisions of BP 185 and RA 7042, as amended by RA 8179, pertinent to land ownership by former Filipinos:

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Requirements For Land Registration or original Certificate of Title (Judicial Titling)

The application for land registration should be filed in triplicate with the Clerk of the Regional Trial Court of the province/city where the property is located. The following documents should be attached to the application:

• The original plan on tracing cloth duly approved by the Director of Lands or Regional Land Director, or in lieu thereof, a true copy of the same on a tracing cloth properly attested and certified by said office or official authorized to make such certification, together with two (2) print copies thereof;
• Technical description, three (3) copies
• Surveyor’s certificate, three (3) copies
• Certificate of the assessed value of the property issued by the provincial treasurer, in quadruplicate

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Requirements For Land Transfer or Transfer Certificate of Title

The following documents are required for the filing of land transfer:

• Copies of the Deed of Absolute Sale
• Latest real estate tax payments
• Latest tax declaration of the property
• Certificate from the Bureau of Internal Revenue that the capital gains tax and documentary stamps have been paid
• Transfer tax
• Receipt of payment of the transfer and registration fees
• Owning Property by Foreigners:
• No foreigner is allowed to own property in the Philippines, as already mentioned in the top section.  But there are exceptions: 
• Foreigners are allowed to own property, especially land, by hereditary succession. This simply means, when your Filipina wife dies, you as the natural heir will become the legal owner of her property. 
• The same is true for the children, every natural child (legitimate or illegitimate) can inherit the property for his/her Filipina mother, even when the child does not have the Philippine citizenship.
• There is one other exception: condominium units and apartments. These can be owned by any foreigner, provided that the alien participation in the complete complex does not exceed 40% of value.

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Acquisition By Former Natural- Born Filipino Citizens  

1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as tax sale, foreclosure sale, or execution sale).
2. Maximum area that may be acquired is as follows :

a)      For residential purpose – 1,000 square meters of urban land or one hectare of rural land.

b)      For business purpose – 5,000 square meters of urban land or three hectares of rural land.

3. “Business purpose” refers to the use of the land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry and services, including the lease of land, but excluding the buying and selling thereof.
4. In case of married couple where both spouses are former natural-born Filipino citizens, one or both of them may avail of the privilege, provided that the total acquisition shall not exceed the maximum area allowed.
5. A transferee who already owns urban or rural land for residential purpose acquired while still a Filipino citizen, may acquire additional urban or rural land for residential purpose which, when added to that already owned by him, shall not exceed the maximum area allowed by law.
6. The same privilege applies to a transferee who already owns urban or rural land for business purpose.
7. A transferee who already acquired urban land for residential purpose shall be disqualified to acquire rural for residential purpose, and vice-versa. The same rule applies to a transferee of land for business purpose.
8. However, a transferee of residential land under B.P. 185 may still avail of the privilege to acquire land for business purpose under R.A. 8179.
9. For registration of a conveyance in favor of the transferee, he must submit to the
10. Register of Deeds a sworn statement on the following: date and place of birth; name of parents, brothers, sisters, and spouse; location, area and mode of acquisition of present landholding; date when he lost his Philippine citizenship; and his present citizenship.
11. For transferees of land for residential purpose, the sworn statement shall include his intention to reside permanently in the Philippines.
12. For transferees of land for business purpose , the sworn statement shall include a declaration to use the land for business purpose. Furthermore, the transferee shall submit a certification of business name registration with the Bureau of Trade
13. Regulation and Consumer Protection. And in case the land is agriculture, he shall likewise submit a certification from the Department of Agrarian Reform that the land is a retained area of the transferor and an affidavit of the transferee that the total landholding inclusive of the land to be acquired does not exceed five hectares.

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Stewardship Concept of Ownership

Ownership carries with it a social obligation. As stewards of their land, owners are obliged to use their property to promote not only their interest but also the general welfare. When a person’s landholding exceeds the requirement of his needs, or his utilization is not conducive to general welfare, the State may exercise its power to regulate and control ownership.

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Fee Simple  

This refers to the “bundle of rights” or attributes which are inherent or appurtenant to ownership, without any limitation or restriction other than those imposed by law or contract. The bundle of rights includes the right to use, to possess, to the fruits, to dispose, and to vindicate or recover.

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Lands of The Public Domain

1. Under the Constitution, lands of the public domain are classified into agricultural, forest or timber, mineral, and national parks.
2. Alienable lands of the public domain shall be limited to agricultural lands.
3. Filipino citizens may acquire alienable lands of the public domain not more than twelve hectares by purchase , homestead , or patent ; or lease not more than 500 hectares
4. Private corporations cannot acquire, but may only lease alienable lands of the public domain for a period not exceeding twenty-five years, renewable for the same term, and not to exceed 1,000 hectares

Rights of Accession  

1. In General – The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, whether naturally or artificially.
2. With Respect to Produce of Property – to the owner belongs the:

a) Natural fruits – the spontaneous product of the soil.

b) Industrial fruits – those produced by land cultivation or labor.

c) Civil fruits – the rental income of buildings and/or lands.

3. With Respect to Immovable Property:

a)      The owner of land on which anything has been built, sown or planted in good faith shall have the right :

                                                               i.      to appropriate as his own the works, sowing or planting after payment of indemnity provided by law.

                                                             ii.      to oblige the builder or planter to pay the price of the land. However, the builder or planter cannot be obliged to pay for the if its value is considerably more than that of the building or planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate the building after proper indemnity. The parties shall agree on the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

b)      The owner of the land on which anything has been built , planted or sown in bad faith may :

                                                               i.      Demand and demolition of the work or removal of the planting or sowing at the expense of the builder or planter, or

                                                             ii.      bb) Compel the builder or planter to pay the price of the land and the sower, the proper rent.

c)      The landowner is also entitled to damages from the builder, planter or sower.

                                                               i.      If there was bad faith on the part of the landowner and the builder/planter/sower, the rights of the parties shall be the same as if both had acted in good faith.

                                                             ii.      to the owners of land adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the water.

                                                            iii.      The owners of estates adjoining ponds or lagoons do not acquire the land left dry by the natural decrease of the waters, or lose that inundated by them in extraordinary floods.

                                                            iv.      River beds which are abandoned through the natural change in the course of the waters belong to the owners whose lands are occupied by the new bed in proportion to the are lost. However, the owner’s of the land adjoining the old bed shall have the right to acquire the same by paying the value of the area occupied by the new bed.

                                                              v.      Whenever a river, changing its course by natural causes, opens a new bed through a private estate, the bed shall become a public dominion.

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Hidden Treasure

1. Hidden treasure belongs to the owner of the land, building, other property on which it is found.
2. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half of the treasure, shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure.
3. If the things found be of interest to science or arts, the State may acquire them at their just price, which shall be divided in conformity with the rule above stated.
4. Hidden treasure, for legal purpose is understood to be any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.

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Meaning of “Title”  

“Title” is not synonymous with torrens Certificate of Title. Rather, it is a generic word which means proof, evidence, or monument of ownership, such as tax declaration, realty tax receipts, deed of sale, and torrens Certificate of Title. But, of course, the best title or best evidence of ownership is the torrens Title because it is indefeasible, imprescriptibly, and binding against the whole world.

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Modes of Acquiring Title

1. Private Grant - voluntary transfer or conveyance of private property by a private owner, such as sale or donation.

2. Public Grant – acquisition of alienable lands of the public domain by homestead patent, free patent, sales patent, or other government awards.

3. Involuntary Grant – acquisition of private party against the consent of the former owner, such as foreclosure sale, execution sale, or tax sale.
4. Inheritance – acquisition of private property through hereditary succession.
5. Reclamation – filling of submerged land, subject to existing laws and government regulations.
6. Accretion – acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as a result of the river current.
7. Prescription – acquisition of title by actual, open, continuous, and uninterrupted possession in the concept of owner for the period required by law.

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Limitations to Bundle of Rights  

1. Legal or Governmental Limitations:

a)      Zoning – refers to land use classifications and the allowable utilization under each classification.

b)      Taxation – the power of the government or any of its political subdivisions to impose charge or burden upon persons, property or property rights for the use and support of the government.

c)      Eminent Domain – the power of the State or any of its instrumentalities to take private property for public use and payment of just compensation.

d)      Other provisions of law such as legal easement, the requirement of legitime in succession, prohibition against sale and encumbrance of property acquired by patent, rent control, laws on subdivision development, urban and agrarian reform, etc.

2. Contractual or Voluntary Limitations:

Those imposed by the grantor of the property to the grantee, either by contract (e.g. donation), or by last will; or those imposed by the owner, himself such as voluntary easement, mortgage, lease, use restrictions in subdivision contracts, etc.

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