A lot of prospective foreign buyers begin their first query as to whether they may be allowed by Philippine laws to own real estate properties in the Philippines. What pertinent laws regarding ownership regulation exists and how can one be assured that their claims are within the bounds of law? We’ve provided as follows the general rule on ownership and its exemptions.
The Philippine laws have regulated land ownership by foreigners because its policies are aimed to protect its economy and patrimony. The Philippine’s highest law of the land, the 1987 Philippine Constitution ordains that regarding ownership, ‘All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State.’ The provisions of Section 2 Article XII on National Economy and Partimony continues as follows with exceptions.
‘With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law.’
WHAT DOES THESE MEAN?
It means that the Philippine soil or lands within its territory are generally owned and under the jurisdiction of the Philippine sovereign, save only agricultural lands as they may be disposed or owned by its citizens, corporations (60% Filipino owned/ 40% Foreign Ownership), and associations.
So although foreign ownership is generally discouraged as a general rule, foreigners may still own real estate properties. They may acquire ownership of real estate properties like houses, buildings, and condominiums, but not the land where these structures are erected upon.
For purposes of simplification there are three commonly known ways whereby a foreigner may own real estate properties.
First, the most common type of ownership for foreigners is owning condominiums. This type of ownership is likened to the restriction in the aforementioned provision, as it provides for 40% restriction for foreign ownership and requires that 60% of the owners are Filipinos. Only the ownership of condominium units is absolute and not the ownership of the land where it is virtually erected.
Secondly, and customarily others who boldly wanted to settle here, especially bachelor retirees, marry Filipinas and named their properties under conjugal ownership.
Lastly, and by far the most complicated but rewarding way is to create a larger scale of ownership which is mostly preferred by huge-sponsored foreign individuals who create a corporation with 40% of their ownership and 60% Filipinos.
Corporations composed of at least five individuals are legal entities which are separate and distinct from their owners. Like an individual, corporations are bestowed with rights and obligations such as the capacity to enter into contracts but most importantly for this purpose to own and lease land for fifty years and renewable for every 25 years. They are advantageous since risks and liabilities are applies only to the corporation and not its owners, capitals may be increased by selling stocks to investors, exist and outlive its incorporators, with management and decision making being shared by board of directors. (BP 68, The Corporation Code of the Philippines)
Other unpopular ways whereby a foreigner may own property are when ownership of properties are said to have been acquired or inherited under the old 1935 Constitution, or through hereditary succession as when a foreigner inherits a property from a Filipino.