Right To Own Property – Laymans Terminology

Explaining the Right To Own Real Estate Property in the Philippines in layman’s (simple) terms…..

Land Title

As a general  rule, only Filipino Citizens and corporations or partnerships at least 60% of the capital of which is owned  by Filipinos are entitled to acquire land in the Philippines.

As exception to the general rule, foreign ownership of real estate in the Philippines is allowed in the following cases:

1. Acquisition before the 1935 Constitution;
2. Acquisition thru hereditary succession. If foreign acquirer is a legal heir;

This means that when the foreign national is married to a Filipino citizen and his/her spouse dies, the non-Filipino as the natural heir is legal owner of the property. The same is true for  children. Every natural child (legitimate or illegitimate) can inherit the property of his/her Filipino parent even if they do not hold Filipino citizenship.

3. Purchase of not more than 40% interest in a condominium project;
4. Purchase by a former natural-born Filipino citizen subject to the limitations  prescribed by Law (Batas Pambansa 185 and R.A. 8179)

3.  A Filipino who married an foreign national retains his/her Philippine citizenship (unless by her act or omission, she is deemed to have renounced her Philippine citizenship) and  may therefore acquire real estate in the Philppines.

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZEN 

1.  Method of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds such as sale due to unpaid tax, foreclosure due to non payment of mortgagor (creditor), or execution sale.

2.  Maximum area that may be allowed depending on local zoning restrictions is:
a..  For residential purpose  –  1,000 square meters of urban land or one (1) hectare of rural land
b.. For business or other purpose – 5,000 square meters  of urban land or three hectares of rural land.

Business or other 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 or selling thereof.”

3.  In case of married couple, one or both of them may avail of the privilege, provided that the total acquisition shall not exceed the maximum area allowed.

4. A transferee of residential land under BP 185 may still avail of the privilege granted under RA 8179.

5.  A transferee who already owns urban or rural land for residential purpose, may acquire additional urban or rural land for residential purpose which, when added to that already owned by him does not exceed the maximum area allowed by law.

The same priviledge applies to a transferee who already owns urban or rural land for business purposes.

6.  A transferee may not acquire more than two urban or two rural lands which should be located in different cities or municipalities.

7.  A transferee who has already acquired urban land for residential purpose shall be disqualified to acquire rural land for residential purpose and vice versa. The same rule applies to a transferee of land for business purpose.

Dual Citizens

  • Dual citizenship means having two citizenships and passports from two different countries. Dual citizenship allows the citizenship holder full rights of possession of Philippine real property.
  • Former Filipino citizens born in the Philippines , who have immigrated to another country and obtained citizenship of that country, then re-acquired their Philippines citizenship.

Foreign Ownership as a Philippine Corporation

  • Foreign nationals or corporations may completely own a condominium or townhouse. To take control of a private land, residential house and lot, and commercial building and lot, foreign nationals or corporations must form a Philippine corporation. The corporation is to be 40% foreign-owned (maximum) and 60% Filipino-owned (minimum), and with at least five [5] directors. A foreign national may be the primary signatory of the bank account, allowing him/her total control over the funds derived from the corporation and the income or sale of the asset or property.

Foreign Leasing of Philippine Real Estate Property

  • A foreign national and or corporation may enter into a lease agreement with Filipino landowners for an initial period of up to 25 years, and renewable for another 25 years.

Note: This document is for information purposes only. The user assumes all risks for its use. For more information please contact your Philippine Lawyer or a Licensed Real Estate Broker.

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