A day spent in our beautiful islands will never really be enough for anyone. And for many of our kababayans who have made a home for themselves abroad, having a piece of heaven back home in the Philippines that they can call their own is something aspirational. Who can blame them? After working tirelessly for their families, sacrificing, and religiously building a nest egg on foreign shores, nothing is more motivating or enticing as the prospect of one day being able to come back home to the Philippines and stay for good.
After all, the Philippines has consistently been hailed as a favorite destination of tourists, ranking 8th in the 20 Most Favorite Countries in the World of the CNT Readers’ Choice Awards 2019. Our island country has also been named one of the world’s best places to retire, according to International Living’s Annual Global Retirement Index, where the Philippines climbed the rankings from 23rd place previously to 19th place in 2017 and ranked eighth in 2014 as a leading expatriate destination in the Inter Nations Survey conducted by Expats Insider.
It therefore comes as no surprise that many have expressed interest in being able to settle, set up their home, or build a second one in the Philippines while pouring in some investments into one of our many beautiful islands. While ours is perhaps one of the most welcoming and hospitable countries in the world, prospective real property buyers will be well advised to remember that the Philippines has one of the most restrictive legal regimes when it comes to owning real property.
What does it take to own land in the Philippines?
Regardless of the nature of the property, due diligence demands being able to answer the following basic questions: Am I eligible to buy the property? Can the property be the subject of a sale? Is the registered owner capable of selling said property? What are the terms of the sale? What happens if there is a problem in the transaction? Do I have remedies I can make use of?
At our firm, we are consistently asked by clients how they can go about purchasing property here. And from the get-go, we tell our clients: It is not as simple. For one, the Philippine Constitution reserves the right to own land solely to Filipinos. In general, only Filipinos are entitled to own or acquire land in the Philippines. So, before any discussion on sales contracts and various legal concerns when it comes to sales, one must determine first if he or she can purchase land here in the Philippines since right is reserved only to Filipinos.
Who are considered Filipinos?
Article IV of the Philippine Constitution says that the following are considered Filipino citizens:
1. Citizens of the Philippines at the time of the adoption of the Constitution in February 1987;
2. Those whose fathers or mothers are citizens of the Philippines;
3. Those born before January 17, 1973, of Filipino mothers, who elect Philippine citizenship upon reaching the age of majority; and
4. Those who are naturalized in accordance with law.
Aside from natural persons or Filipino citizens, Philippine-owned and operated entities like corporations or partnerships—where at least 60% ownership is with Filipinos—may also own land.
Is it possible for a non-Filipino to acquire land in the Philippines?
Yes, there are some exceptions to the general rule discussed earlier. But such acquisition must fall under any one of the following:
1. The land was acquired before 1935 (prior to the 1935 Constitution, there was no prohibition on foreigners owning land);
2. The land was inherited by a foreigner through succession or inheritance;
3. The land is to be acquired by a natural-born Filipino—with at least one parent who is Filipino—who has lost their Philippine citizenship (for residential purposes, a maximum of 1000sqm of urban land or 1ha of rural land; for business or investment purposes 5000sqm of urban land or 3ha of rural land);
4. Purchase by a Filipino dual citizen.
Who is a dual citizen?
A Filipino dual citizen is one who became a naturalized citizen of another country and opted to regain his or her Filipino citizenship. The said dual citizen can still purchase and register any real estate property under their own name like any other Filipino citizen.
If you’re any of the above, you may be one step closer to owning a piece of Philippine real estate. At our firm, we always caution clients to proceed with eyes wide open and be aware of all the possible risks and what to watch out for on the legal front when assessing possible properties to purchase.
For those not falling under any of the scenarios above, what options are available for them to own real property in PH?
Projects like condominiums may be an option. By definition, a condominium is an interest in real property consisting of separate, distinct interest in a unit in a residential, industrial, or commercial building; and an undivided or shared and unidentifiable interest in the land on which it is located and in other common areas of the project. Without any particular portion of the land being owned by a condominium owner, the restriction on non-Fiipinos when it comes to land ownership does not automatically apply to a condominium unit.
In fact, the Condominium Act of the Philippines allows foreigners to acquire units or shares in a condominium corporation, as long as the total foreign ownership in the said corporation won’t exceed 40% of the entire project. Interestingly, when we talk of condominiums, these are not simply limited to high-rises or buildings, there are also single-detached homes or townhouses whose titles will show them to be part of a condominium corporation.
If the primary objective is not ownership of real property but simply have the means to establish one’s residence or to have a home to call one’s own here in the Philippines, interested parties may also choose to perhaps enter into one of the many lease or time-sharing options available in the country. Instead of being an owner of Philippine real estate, through a lease agreement, one can still have a home, establish a business, or call the Philippines their base by occupying and having possession of real property while ownership is with someone else.
*Atty. Eirene Jhone E. Aguila ([email protected]) is a lawyer, professor of law, and entrepreneur. She has been in the practice of law for close to two decades. Her practice ranges from contract and transactions law, litigation and dispute resolution, special projects, civil, criminal, and administrative litigation, personal and corporate representation, as well as public interest, strategic litigation, and real property ownership in the Philippines, to name some.