JULY 28, 2020

Foreigners Can Own Land in the Philippines

As a rule, foreigners cannot own land in the Philippines. But, that’s the general rule. There are, in fact, recognized exceptions on when foreigners can own land in the Philippines.

Uncategorized

As a rule, foreigners cannot own land in the Philippines. But, that’s the general rule. There are, in fact, recognized exceptions on when foreigners can own land in the Philippines.

Acquisition before the 1935 Constitution

Prior to the 1935 Constitution, there was actually no law prohibiting foreigners from owning lands in the Philippines. In fact, the Land Registration Act of 1902 – the landmark American legislation that provided for a comprehensive registration of land titles under the Torrens system- did not make Filipino citizenship a requirement to apply for registration of title. The Public Land Act of 1903 even expressly recognized the right of American citizens to apply for a homestead of as much as 16 hectares of unoccupied, unreserved, unappropriated agricultural public land alongside Filipinos.

It was only in the 1935 Constitution that the reservation of land ownership to Filipinos first made its appearance. Section 5, Article XII of the 1935 Constitution reads:

Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines.

According to Section 1 of Article XII, only Filipino citizens or corporations at least 60 percent of which is owned by Filipinos are qualified to acquire or hold lands of the public domain.

Acquisition through hereditary succession

These exact provisions were transplanted to the 1987 Constitution. Notably, however, Section 5 of the 1935 Constitution (Section 7 of the 1987 Constitution ) itself provides another exception to the prohibition on foreign ownership of land – hereditary succession.

Acquisition by hereditary succession, as opposed to testamentary succession, simply means that a foreigner can acquire land if he or she is a legal heir of a Filipino who owned it, and who died without a will (intestate succession). Articles 978 to 1014 of the Philippine Civil Code enumerate the order of hereditary or intestate succession as follows:

(1) legitimate children or descendants of the deceased;

(2) in default of above, legitimate parents or ascendant;

(3) illegitimate children or descendants;

(4) surviving spouse;

(5) brothers and sisters;

(6) other collateral relatives within the fifth degree; and

(7) the State.

There is no issue if the foreigner is a legal heir and named in the Last Will and Testament, but if he or she is not a legal heir, he or she cannot acquire land even if he or he is given a devise (real property) in the Last Will and Testament. The Constitutional provision that enables aliens to acquire private lands does not extend to testamentary succession for otherwise the prohibition will be meaningless since any alien would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece of land.

Foreigner was a natural -born Filipino

Another exception found in the 1987 Constitution is when the foreigner was a natural-born Filipino. It provides that a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of priivate lands, subject to limitations provided by law.

Batas Pambansa Bilang 185, the law that implements this provision of the Constitution provides that a natural-born Filipino who lost his Philippine citizenship can own up to a maximum area of 1,000 square meters, in the case of urban land, or one hectare in the case of rural land, to be used by him or her as his residence. In the case of married couples, one or both may own land as long as the total area of the combined property shall not go beyond the maximum limit.

Republic Act No. 8179, or the Liberalized Foreign Investment Act, also gives former natural-born Filipinos the right to own private land up to a maximum area of 5,000 square meters in the case of urban land or three hectares in the case of rural land to be used by them for business.

Filipinos married to foreigners

Unless they renounced their Philippine citizenship, Filipinos who married foreigners retain their citizenship even if they become citizens of their spouses’ country of origin. It follows that they can still acquire and own land in the Philippines.

Those who renounce their Philippine citizenship may reacquire it by becoming a dual citizen. Under Republic Act No. 9225, or the Dual Citizenship Law of 2003, natural born Filipinos who eventually lost their Philippine citizenship to another country because of naturalization may regain their Filipino citizenship after swearing allegiance to the Philippines. After reacquiring their Philippine citizenship, they are again considered citizens and may own real property without any constraints.

In many cases, foreigners married to Filipinos purchase land through their Filipino spouse. Because of the constitutional prohibition, however, the title to the land can only be registered to their Filipino spouse. Nevertheless, foreigners who purchase the land are not prohibited from assigning their rights and interests in the property to a Filipino.

Ownership through a Philippine Corporation

Although, they will not technically own the land, foreigners may indirectly purchase and own it through a corporation at least 60% of which is owned by Filipinos, which is considered a Philippine corporation, and is therefore qualified to acquire and own land. This explains how foreigners can purchase condominium units or townhouses in development projects built on parcels of land owned by condominium corporations.

Foreign investors may also consider entering into a long-term lease of private lands instead. Subject to certain conditions, a foreign investor may lease a private land for a period not exceeding 50 years, renewable once for a period of not more than 25 years.

The debate on whether land ownership in the Philippines should be liberalized continues to this day, with some arguing that lifting the nationality restriction on land ownership would result in more foreign investments while others asserting that it can result in more landless Filipinos.

Until the 1987 Constitution is amended, only the instances above are the ways foreigners can own land in the Philippines.

JANUARY 27, 2020

Foreigners Can Own Land in the Philippines

Foreigners cannot own land in the Philippines. But, that’s the general rule. There are, in fact, recognized exceptions on when foreigners can own land in the Philippines.

Blogs

As a rule, foreigners cannot own land in the Philippines. But, that’s the general rule. There are, in fact, recognized exceptions on when foreigners can own land in the Philippines.

Acquisition before the 1935 Constitution 

Prior to the 1935 Constitution, there was actually no law prohibiting foreigners from owning lands in the Philippines. In fact, the Land Registration Act of 1902 – the landmark American legislation that provided for a comprehensive registration of land titles under the Torrens system- did not make Filipino citizenship a requirement to apply for registration of title. The Public Land Act of 1903 even expressly recognized the right of American citizens to apply for a homestead of as much as 16 hectares of unoccupied, unreserved, unappropriated agricultural public land alongside Filipinos. 

It was only in the 1935 Constitution that the reservation of land ownership to Filipinos first made its appearance. Section 5, Article XII of the 1935 Constitution reads: 

Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines. 

According to Section 1 of Article XII, only Filipino citizens or corporations at least 60 percent of which is owned by Filipinos are qualified to acquire or hold lands of the public domain. 

Acquisition through hereditary succession

These exact provisions were transplanted to the 1987 Constitution. Notably, however, Section 5 of the 1935 Constitution (Section 7 of the 1987 Constitution ) itself provides another exception to the prohibition on foreign ownership of land – hereditary succession. 

Acquisition by hereditary succession, as opposed to testamentary succession, simply means that a foreigner can acquire land if he or she is a legal heir of a Filipino who owned it, and who died without a will (intestate succession). Articles 978 to 1014 of the Philippine Civil Code enumerate the order of hereditary or intestate succession as follows: 

(1) legitimate children or descendants of the deceased; 

(2) in default of above, legitimate parents or ascendant; 

(3) illegitimate children or descendants; 

(4) surviving spouse; 

(5) brothers and sisters; 

(6) other collateral relatives within the fifth degree; and 

(7) the State. 

There is no issue if the foreigner is a legal heir and named in the Last Will and Testament, but if he or she is not a legal heir, he or she cannot acquire land even if he or he is given a devise (real property) in the Last Will and Testament. The Constitutional provision that enables aliens to acquire private lands does not extend to testamentary succession for otherwise the prohibition will be meaningless since any alien would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece of land. 

Foreigner was a natural -born Filipino

Another exception found in the 1987 Constitution is when the foreigner was a natural-born Filipino. It provides that a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of priivate lands, subject to limitations provided by law. 

Batas Pambansa Bilang 185, the law that implements this provision of the Constitution provides that a natural-born Filipino who lost his Philippine citizenship can own up to a maximum area of 1,000 square meters, in the case of urban land, or one hectare in the case of rural land, to be used by him or her as his residence. In the case of married couples, one or both may own land as long as the total area of the combined property shall not go beyond the maximum limit. 

Republic Act No. 8179, or the Liberalized Foreign Investment Act, also gives former natural-born Filipinos the right to own private land up to a maximum area of 5,000 square meters in the case of urban land or three hectares in the case of rural land to be used by them for business. 

Filipinos married to foreigners 

Unless they renounced their Philippine citizenship, Filipinos who married foreigners retain their citizenship even if they become citizens of their spouses’ country of origin. It follows that they can still acquire and own land in the Philippines. 

Those who renounce their Philippine citizenship may reacquire it by becoming a dual citizen. Under Republic Act No. 9225, or the Dual Citizenship Law of 2003, natural born Filipinos who eventually lost their Philippine citizenship to another country because of naturalization may regain their Filipino citizenship after swearing allegiance to the Philippines. After reacquiring their Philippine citizenship, they are again considered citizens and may own real property without any constraints. 

In many cases, foreigners married to Filipinos purchase land through their Filipino spouse. Because of the constitutional prohibition, however, the title to the land can only be registered to their Filipino spouse. Nevertheless, foreigners who purchase the land are not prohibited from assigning their rights and interests in the property to a Filipino. 

Ownership through a Philippine Corporation 

Although, they will not technically own the land, foreigners may indirectly purchase and own it through a corporation at least 60% of which is owned by Filipinos, which is considered a Philippine corporation, and is therefore qualified to acquire and own land. This explains how foreigners can purchase condominium units or townhouses in development projects built on parcels of land owned by condominium corporations. 

Foreign investors may also consider entering into a long-term lease of private lands instead. Subject to certain conditions, a foreign investor may lease a private land for a period not exceeding 50 years, renewable once for a period of not more than 25 years. 

The debate on whether land ownership in the Philippines should be liberalized continues to this day, with some arguing that lifting the nationality restriction on land ownership would result in more foreign investments while others asserting that it can result in more landless Filipinos. 

Until the 1987 Constitution is amended, only the instances above are the ways foreigners can own land in the Philippines.