Foreign nationals can own a property in the Philippines

#howtoownpropertyinphilippinesforforeigners #ownpropertyinphilippines #guideforforeigners

Real estate laws and transactions in the Philippines involve several laws and regulations including the Philippine Constitution especially where foreign nationals are involved in the transaction. These are the basic and key questions how a foreign national can own a property in the Philippines.

Question: Can foreigners own private land in the Philippines?

Answer: No. Foreign nationals can not own private lands because of the restriction in the 1987 Philippine Constitution which exclusively reserves ownership of private lands to Philippine citizens and Philippine nationals.

A corporation that has a 60% total capital stock Filipino ownership who are entitled to vote in the election of directors is considered a Philippine national. Foreign nationals and foreign companies may own the remaining 40%.

Exceptions to the constitutional restriction:

1. Acquisition of the land by a foreign national before the 1935 Philippine Constitution

2. Hereditary succession when the foreign national inherited the property being the legal or natural heir of the decedent

3. Dual citizens who are former Filipino citizens who became citizens of foreign countries can own lands without restrictions under the Dual Citizenship Law of 2003 because they are deemed not to have lost their Philippine citizenship

4. Acquisition by a domestic company, 40% of its total capital stock is owned by a foreign national or foreign company

5. Land purchased by a foreign national who is a former natural-born Philippine citizen, subject to limitations:

For residence purpose you may buy maximum of 1,000 square meters of urban land and 1 hectare of rural land

For business or commerce purpose: maximum of 5,000 square meters of urban land and 3 hectares of rural land.

Total ownership for spouses are subject to the applicable restrictions.

Question: Can a foreign national own a property in the Philippines?

Answer: Yes, you can legally and exclusively own real properties in the Philippines in your own name such as

1. condominium units, subject to provisions of the Philippine Condominium Act

2. buildings, machineries and other forms of real property other than land.

Generally, buildings, machineries or other real property follow the ownership of the land. However, separate legal ownership of buildings, houses or other forms of real property may be done from the land where such structures are located and built.

Question: Can a foreign national own a private land with his or her Filipino spouse?

Answer: If a foreign national purchases a private land with a Filipino spouse, the foreign nationals name may be included in the Contract of Sale or Deed of Sale but it can not be included in the Transfer Certificate of Title (TCT). The name indicated in the Transfer Certificate of Title is for legal intents and purposes the legitimate owner of the property. The foreign national can not sell the property without the consent and signature of the Filipino spouse because the name indicated on the TCT is the Filipino spouses’ name.

Question: As a foreign national, what are your other options to exercise rights over a private land?

Answer: Foreign nationals can lease a private land subject to the Lease Act. As a general rule, a foreign national or foreign company can lease a private land for 25 years and may be renewed for another 25 years.

Question: Can the lease be longer than 25 years?

Answer: Under certain circumstances, such as

1. under the Investor’s Lease Act, foreign investors may lease private lands subject to certain conditions for a maximum of 50 years’ renewable for another 25 years. The lease shall be for the purpose of establishing industrial estates, factories, assembly or processing plants, agro-industrial enterprises and similar activities and should be registered with the Department of Trade and Industry.

2. foreign companies located inside special economic and industrial zones can have a maximum 50-year term lease renewable for another 25 years.

Question: What would be the typical transaction for a foreign national who wants to own a private land for residential or commercial purpose?

Answer: A foreign national can lease a private land for say 25 years and have full title to the house or building and other real properties over the leased land. The private land may be owned by a Philippine national 40% of which can be owned by a foreign national or a foreign company.