More and more foreigners are now becoming interested in buying properties

in the Philippines because of many factors like: our tropical climate, the
warmth of the Filipinos and great opportunities for investments. On the other
hand, many people are still not sure whether foreigners can own property in
the country. The answer is yes, foreigners may own real estate property in
the Philippines, but they are not allowed to buy and own land. Foreign
ownership of property in our country is not absolute and subject to
restrictions.

Non-Filipinos may purchase and own condominium units built on Philippine

soil. The ownership of condominium units is still subject to a 40% restriction
for foreigners because a condominium project is similar to a corporation set
up where 60% must be owned by Filipinos. Although it is clear from our laws
that foreigners are not allowed to own land and their ownership of other
forms of real estate properties is limited, these rules are subject to certain
limitations.

Do you think that allowing foreigners to own land in the Philippines will boost our economy?
Source: philagrivest.com

Foreigners may acquire and buy real estate property in the Philippines
under the following conditions:

1. The property was acquired under the 1935 Constitution.

2. Acquiring real property through hereditary succession.

This means that a person (not Filipino) inherited the property or land which
may have been acquired under the 1935 Philippine Constitution.

3. Not more than 40% of the units of a condominium project.

4. If the property was bought by the owner when he or she was still a
natural born Filipino citizen but subject to the restrictions provided by
law.
5. For former natural born citizens, the ownership of an urban land shall
be limited to 1,000 square meters while for rural land, it must not
exceed 1 hectare and must be used exclusively for residential purpose
in accordance with Batas Pambansa Bilang 185.

For married couples under this rule, one or both may own land as long as the
total area of the combined property shall not go beyond the maximum limit.
For Filipinos who married a foreigner, Philippine citizenship is not
automatically relinquished. Under Article IV Section 4 of the Philippine
Constitution, “Citizens of the Philippines who marry aliens shall retain their
citizenship, unless by their act or omission, they are deemed, under the law,
to have renounced it.” An example of renouncing Philippine citizenship is
when a spouse would swear allegiance to become a citizen of the spouse’s
country. Any person although married to a foreigner can buy and own land
in the Philippines for as long as they have not renounced said citizenship.
They may acquire and own land without restrictions since they are deemed
to have retained their citizenship.

6. Under 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 the reacquisition of the Philippine
citizenship, they are again considered as citizens and may own real
property without any constraints.
7. Foreigners may own houses or building but not the land where the
structures are built on. A foreign individual or corporation may only
lease and not own Philippine land. Such lease shall be in a long-term
contract which must be good for 50 years and after which, the rent is
renewable every 25 years.

CAN A FOREIGNER INHERIT LAND IN THE PHILIPPINES?

Posted on March 28, 2016 by Lawyers in the Philippines

There are many possible variations of this theme. An exhaustive dissertation of all of them would
take volumes. This article will discuss one particular, common scenario.

In this scenario, a foreigner spouse is married to a Filipino. The Filipino owns land in the Philippines.
Let’s assume there are no children, mutual or otherwise, involved.

Philippine law prohibits a foreigner from buying land in the Philippines. But what if the Filipino
spouse were to pass away? Can the surviving foreigner spouse then inherit the land owned by the
deceased Filipino?

.
Yes. The Philippine laws that apply here are the 1987 Constitution of the Philippines and the 1949
Civil Code inherited from Spain.

Although Sections 3 and 8 of Article XII of the Constitution famously restrict the ownership of land
by individuals to Filipinos and former Filipinos, Section 7 of the same Article allows foreign citizens to
own land by way of legal inheritance.

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or hold lands of the public
domain.

Section 7 speaks of hereditary succession. In legal speak, this means that a foreigner can acquire
land through intestate inheritance, i.e. the default laws on inheritance which are not transfers of
property by way of a last will and testament.

This means that Section 7, Article XII of the Constitution should be read in relation with the
Philippine Civil Code’s provisions on intestate inheritance.

Specifically, Articles 995, 997 and 1001 of the Civil Code. I’ll give you the entire subsection on a
surviving spouse:

Subsection 4. – Surviving Spouse

Art. 995. In the absence of legitimate descendants and ascendants, and illegitimate children and
their descendants, whether legitimate or illegitimate, the surviving spouse shall inherit the entire
estate, without prejudice to the rights of brothers and sisters, nephews and nieces, should there be
any, under article 1001. (946a)

Art. 996. If a widow or widower and legitimate children or descendants are left, the surviving spouse
has in the succession the same share as that of each of the children. (834a)

Art. 997. When the widow or widower survives with legitimate parents or ascendants, the surviving
spouse shall be entitled to one-half of the estate, and the legitimate parents or ascendants to the
other half. (836a)

Art. 998. If a widow or widower survives with illegitimate children, such widow or widower shall be
entitled to one-half of the inheritance, and the illegitimate children or their descendants, whether
legitimate or illegitimate, to the other half. (n)

Art. 999. When the widow or widower survives with legitimate children or their descendants and
illegitimate children or their descendants, whether legitimate or illegitimate, such widow or widower
shall be entitled to the same share as that of a legitimate child. (n)

Art. 1000. If legitimate ascendants, the surviving spouse, and illegitimate children are left, the
ascendants shall be entitled to one-half of the inheritance, and the other half shall be divided
between the surviving spouse and the illegitimate children so that such widow or widower shall have
one-fourth of the estate, and the illegitimate children the other fourth. (841a)

Art. 1001. Should brothers and sisters or their children survive with the widow or widower, the latter
shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the
other half. (953, 837a)

Art. 1002. In case of a legal separation, if the surviving spouse gave cause for the separation, he or
she shall not have any of the rights granted in the preceding articles. (n)

These articles should be read in relation to Article 985 of the same Code.

Article 985. In default of legitimate children and descendants of the deceased, his parents and
ascendants shall inherit from him, to the exclusion of collateral relatives. (935a)

So given our scenario of a childless Filipina wife who owns land in the Philippines, should she pass
away without a will, what are the legal inheritance rights of her foreign, surviving husband?

Answer:

He can inherit her property (including land), subject to the shares of her surviving relatives.

1) If the Filipina wife were to pass away with none of her parents or siblings still living, the foreign
widower would be entitled to his wife’s entire estate.

2) If the Filipina wife were to pass away with her parents and siblings still living, the foreign widower
would be entitled to half his wife’s estate and her parents to the other half.

3) If the Filipina wife were to pass away after her parents had already passed away and with her
siblings still living, the foreign widower would be entitled to half his wife’s estate and her siblings to
the other half.

There are other aspects of the law you might consider in practice.

A foreigner cannot own land, but he can own the house built on it. A thorough documentation of his
costs and acquisition of the house in his name, amply corroborated by other evidence, can establish
that at least the house will not be part of his deceased wife’s estate. This reduces the extent of his
exposure to problems down the line.

It might also be possible for the wife to encumber the Title to the land in some way – via her making
a limited will or through an annotation on the Title or through some other deed (say a long term
lease agreement which can be for an initial period of 25 years renewable for another 25 years) – so
as to protect her widower’s use of the land for at least his lifetime.

There are more extreme scenarios of the wife executing a will that explicitly disinherits other
members of her family for strong reasons (check out Articles 919, 920 and 921 of the Civil Code),
leaving her husband her sole heir, but these should certainly not be the first recourse without strong
cause when other legal ways can be put in place.

Philippines Land Ownership and Acquisition

In general, only Filipino citizens and corporations or partnerships with least 60% of the shares are
owned by Filipinos are entitled to own or acquire land in the Philippines. Foreigners or non-
Philippine nationals may however purchase condominiums, buildings, and enter into a long term
land lease.

K&C assists foreigners, non-Philippine nationals, Filipinos, OFW, Balikbayans, and corporations
purchasing and acquiring real property in the Philippines and can provide relevant information on
Philippine laws and regulations regarding property purchase and acquisition, review general
contracts, asset protection contracts, deeds of sale, taxes, and handle entire estate planning. In
addition, K&C can introduce you to local real estate brokers to assist you in finding the property
you are looking for in the Philippines.

Foreign Ownership of Land in the Philippines

Ownership of land in the Philippines is highly-regulated with land ownership reserved for persons
or entities considered Philippine nationals or Filipino citizens. For this purpose, a corporation
owned 60% by Filipino citizens is treated as a Philippine national. Foreigners interested in
acquiring land or real property through aggressive ownership structures must consider the
provisions of the Philippines’ Anti-Dummy Law to determine how to proceed. A major restriction in
the law is the restriction on the number of alien members on the Board of Directors of a landholding
company which is limited to 40% alien participation. Another concern is the possible forfeiture of
the property if the provisions of the law is breached.

Exceptions to the restriction on foreigners

acquisition of land in the Philippines are the
following:
 Acquisition before the 1935 constitution
 Acquisition through hereditary succession if the foreigner is a legal or natural heir
 Purchase of not more than 40% interest in a condominium project
  Purchase by a former natural-born Filipino citizen subject to the limitations prescribed by
law. (Natural-born Filipinos who acquired foreign citizenship is entitled to own up to 1,000
sq.m. of residential land, and 1 hectare of agricultural or farm land)
 Filipinos who are married to aliens who retain their Filipino citizenship, unless by their act
or omission they have renounced their Filipino citizenship

Foreigner Ownership as a Philippine Corporation

Foreign nationals or corporations may completely own a condominium or townhouse in the
Philippines. To take ownership of a private land, residential house and lot, and commercial building
and lot, foreigners may set up a Philippine corporation in the Philippines. This means that the
corporation owning the land has less than or up to 40% foreign equity and is formed by 5-15 natural
persons of legal age as incorporators, majority of whom are Philippine residents.

Foreigners Leasing of Philippine Real Estate

Property
Leasing land in the Philippines on a long term basis is an option for foreigners or foreign
corporations with more than 40% foreign equity. Under the Investor’s Lease Act of the Philippines,
a foreign national and/or corporation may enter into a lease agreement with Filipino landowners
for an initial period of up to 50 years renewable once for an additional 25 years.

Foreigners Owning Houses in the Philippines

Foreigners owning a house or building in the Philippines is legal as long as the foreigner does not
own the land on which the house is build.

Foreigners Owning Condominiums & Townhouses

in the Philippines
The Condominium Act of the Philippines, R.A. 4726, expressly allows foreigners to acquire
condominium units and shares in condominium corporations up to not more than 40% of the total
and outstanding capital stock of a Filipino-owned or controlled condominium corporation. However,
there are a very few single-detached homes or townhouses in the Philippines with condominium
titles. Most condominiums are high rise buildings.

Foreigners Married to a Filipino Citizen

If holding a title as an individual, a typical situation would be that a foreigner married to a Filipino
citizen would hold title in the Filipino spouse’s name. The foreign spouse’s name cannot be on the
Title but can be on the contract to buy the property. In the event of death of the Filipino spouse,
the foreign spouse is allowed a reasonable amount of time to dispose of the property and collect
the proceeds or the property will pass to any Filipino heirs and/or relatives.

Former Natural-born Philippine Citizen now

Naturalized American Citizen
Any natural-born Philippine citizen who has lost his Philippine citizenship may still own private land
in the Philippines up to a maximum area of 5,000 square meters in the case of rural land. In the
case of married couples, the total area that both couples are allowed to purchase should not
exceed the maximum area mentioned above.

Filipinos & Former Filipino Citizens, Balikbayans &

OFW
Former natural-born Filipinos who are now naturalized citizens of another country can buy and
register, under their own name, land in the Philippines but limited in land area. However, those
who avail of the Dual Citizenship Law in the Philippines can buy as much as any other Filipino
citizen. Under Republic Act 9225 (Philippines Dual Citizenship Law of 2003), former Filipinos who
became naturalized citizens of foreign countries are deemed not to have lost their Philippine
citizenship, thus enabling them to enjoy all the rights and privileges of a Filipino regarding land
ownership in the Philippines.

Steps to Gain Dual Citizenship:

 If you are in the Philippines, file a “Petition for Dual Citizenship and Issuance of
Identification Certificate (IC) pursuant to RA 9225” at the Bureau of Immigration (BI) and
for the cancellation of your alien certificate of registration.
 Those who are not BI-registered and overseas should file the petition at the nearest
embassy or consulate.
Requirements:

 Birth certificate authenticated by the Philippines National Statistics Office (NSO)

 Accomplish and submit a “Petition for Dual Citizenship and Issuance of Identification
Certificate (IC) pursuant to RA 9225” to a Philippine embassy, consulate, or the Bureau of
Immigration
 Pay a $50.00 processing fee, schedule, and take an “Oath of Allegiance” before a consular
officer
 The Bureau of Immigration in Manila receives the petition from the embassy or consular
office. The BI issues and sends an Identification Certificate of citizenship to the embassy
or consular office.
If a former Filipino who is now a naturalized citizen of a foreign country does not want to avail of
the Dual Citizen Law in the Philippines, he or she can still acquire land based on BP (Batas
Pambansa) 185 & RA (Republic Act) 8179 but limited to the following:

For Residential Use (BP 185 – enacted in March 1982):

 Up to 1,000 square meters of residential land

 Up to one (1) hectare of agricultural of farm land
For Business/Commercial Use (RA 8179 – amended the Foreign Investment Act of 1991):

 Up to 5,000 square meters of urban land

 Up to three (3) hectares of rural land

Real Estate Transaction Costs in the Philippines

Purchases from Individuals:
 Philippines Capital gains tax – 6% of actual sale price. This is paid by the seller but in some
cases it might be expected that the buyer pays. This percentage could differ if the property
 assessed is being used by a business or is a title owned by a corporation, in this case the
percentage is 7.5%
 Philippines Document stamp tax – 1.5% of the actual sale price. This is paid by whether
the buyer or the seller upon agreement. Normally however, it is the buyer who shoulders
the cost.
 Philippines Transfer tax – 0.5% of the actual sale price
 Philippines Registration fee – 0.25% of the actual sale price

Purchases from Developers:

 Philippines Capital gains tax – 10% of actual sale price. This value might be expressed as
part of the sale price.
 Philippines Document stamp tax – 1.5% of the actual sale price
 Philippines Transfer tax – 0.5% of the actual sale price
 Philippines Registration fee – 0.25% of the actual sale price

The answer is yes, foreigners may own real estate property in the Philippines, but they are not
allowed to buy and own land. Foreign ownership of property in our country is not absolute and
subject to restrictions. Non-Filipinos may purchase and own condominium units built on Philippine
soil