Real Estate Laws in the Philippines

Fundamentals of Property Ownership

RIGHT TO OWN

1. General Rule - Only Filipino Citizens and corporations or partnerships at least 60% of the capital of which is owned by Filipinos are entitled to acquire land in the Philippines.
2. As exception to the general rule, alien acquisition of real estate in the Philippines is allowed in the following cases:
a.. Acquisition before the 1935 Constitution;
b.. Acquisition thru hereditary succession. If foreign acquiree is a legal heir; This simply means that when the non-Filipino is married to a Filipino citizen and the spouse dies, the non-Filipino as the natural heir will become the legal owner of the property. The same is true for the children. Every natural child (legitimate or illegitimate) can inherit the property of his/her Filipino father/mother even if he/she does not have any Filipino citizenship.
c.. Purchase of not more than 40% interest in a condominium project;
d.. Purchase by a former natural-born Filipino citizen subject to the limitations prescribed by Law (Batas Pambansa 185 and R.A. 8179)
3. A Filipino who married an alien retains her Philippine citizenship (unless by her act or ommision, she is deed to have renounced her Philippine citizenship) and may therefore acquire real estate in the Phiippines. ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZEN
1. Mode of acquision is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as tax sale, foreclosure sale, or execution sale).
2. Maximum area that may be allowed is as follows:
a.. For residential purpose - 1,000 square meters of urban land or one (1) hectare of rural land (BP 185)   b.. For business or other purpose - 5,000 square meters of urban land or three hectares of rural land. "Business or other purpose" refers to the use of the land primarily, directly and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry and services, including the lease of land, but excluding the buying or selling thereof."
3. In case of married couple, one or both of them may avail of the privilege, provided that the total acquisition shall not exceed the maximum area allowed.
4. A transferee of residential land under BP 185 may still avail of the privilege granted under RA 8179.
5. A transferee who already owns urban or rural land for residential purpose, may acquire additional urban or rural land for residential purpose which, when added to that already owned by him shall not exceed the maximum area allowed by law. The same priviledge applies to a transferee who already owns urban or rural land for business purposes.
6. A transferee may not acquire more than two urban or two rural lands which should be located in different cities or municipalities.
7. A transferee who has already acquired urban land for residential purpose shall be disqualified to acquire rural land for residential purpose and vice versa. The same rule applies to a transferee of land for business purpose. Dual Citizens Dual citizenship means having two citizenships and passports from two different countries. Dual citizenship allows the citizenship holder full rights of possession of Philippine real property. This is a new law and it is still unclear as to the procedures involved to implement it. Dual citizenship is now available for the following: Former Filipino citizens born in the Philippines , who have immigrated to another country and obtained citizenship of that country. Note: For former natural born Filipino Citizen, please visit the Philippine Embassy in your country for more information or to apply for Dual Citizenship. Foreign Ownership as a Philippine Corporation Foreign nationals or corporations may completely own a condominium or townhouse. To take ownership of a private land, residential house and lot, and commercial building and lot, foreign nationals or corporations should form a Philippine corporation. The corporation is to be 40% foreign-owned (maximum) and 60% Filipino-owned (minimum), and with at least five [5] incorporators. Upon incorporation, a main bank account should be tied to it. A foreign national may be the sole person in the bank account, allowing him/her total control over the funds derived from the corporation and the income or sale of the asset or property. Foreign Leasing of Philippine Real Estate Property A foreign national and or corporation may enter into a lease agreement with Filipino landowners for an initial period of up to 50 years, and renewable for another 25 years. Note: This document is for information purposes only. The user assumes all risks for its use. www.pilipinasproperties.com assumes no responsibility for such use. For more information please contact your Philippine Lawyer or a Licensed Real Estate Broker.

FUNDAMENTALS OF PROPERTY OWNERSHIP
By: Atty. R.B. Palacio, Jr.

CONCEPT OF OWNERSHIP

Ownership is the independent right of a person to the exclusive enjoyment and control of a property including its disposition and recovery subject only to the restrictions established by law and rights of others.
RIGHTS INCLUDED IN OWNERSHIP

Fee simple consists of the so called “bundle of rights” which are inherent in or appurtenant to ownership, without any limitations or restrictions other than those imposed by law or contract. The bundle of rights include the following:
1. Right to possess
2. Right to use and enjoy
3. Right to the fruits
4. Right to dispose
5. Right to vindicate or recover

LIMITATIONS ON RIGHT OF OWNERSHIP

1. Those imposed in general by the State in the exercise of the power of taxation, police power, and power of eminent domain.
2. Those imposed by law such as legal easement, requirement of legitimate succession, zoning, building code, rent control, urban and agrarian reform, subdivision regulations, escheat.
3. Those imposed by the grantor of the property on the grantee by contract, such as donation, last will, or usufruct.
4. Those imposed by the owner himself, such as voluntary easement, lease, mortgage.

SURFACE, SUBSURFACE AND AIR RIGHT

Land, in its legal signification, extends from the surface downwards to the center of the earth and extends upwards indefinitely to the skies. The surface and subsurface of rights of an owner entitle him to construct thereon any works or make any plantations and excavations without detriment to servitudes and special laws. Air right is the right of an owner to use and control the air space over his land subject to the requirements of aerial navigation, laws, or contract.

RIGHT TO HIDDEN TREASURE

Hidden treasure belongs to the owner of the land, building, other property on which it is found. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half of the treasure shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the things found be of interest to science or arts, the State may acquire them at their just price, which shall be divided in conformity with the rule above stated. Hidden treasure, for legal purpose, is understood to be any hidden unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.

RIGHTS OF ACCESSION

1. In General – The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, whether naturally or artificially.
2. With Respect to Produce of Property – To the Owner belongs the:   a. Natural fruits – the spontaneous product of the soil   b. Industrial fruits – those produced by land cultivation or labor c. Civil fruits – the rental income of buildings and /or lands
3. With Respect to Immovable Property:
a. The owner of the land on which anything has been built, sown or planted in good faith shall have the right:
i. To appropriate as his own the works, sowing or planting after payment of indemnity provided by law, or
ii. To oblige the builder or planter to pay the price of the land. However, the builder of planter cannot be obliged to pay for the land if its value is considerably more than that of the building or planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate the building after proper indemnity. The parties shall agree on the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
b. The owner of the land on which anything has been built, planted or sown In bad faith may:     . Demand the demolition of the work or removal of the planting or sowing at the expense of the       builder or planter, or
ii. Compel the builder or planter to pay the price of the land and the sower, the proper rent. The landowner is also entitled to damages from the builder planter or sower.
iii. To the owners of land adjoining the banks of rivers belong the accretion which they gradually receive         from the effects of the current of the water.
iv. Whenever a river, changing its course by natural causes, opens a new bed through a private estate, the new bed shall become a public dominion.
RIGHT TO OWN
1. General Rule – Only Filipino citizens and corporations at least 60% capital of which is owned by Filipinos are entitled to acquire and own land in the Philippines.
2. Exceptions to the General Rule – Alien acquisition of real estate in the Philippines is allowed in the following cases:
a) Acquisition before the 1935 Constitution.
b) Acquisition thru hereditary succession if the acquiree is a legal heir.
c) Purchase of not more than 40% interest in a condominium project
d) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185 and R.A. 81793.
A Filipina who marries an alien retains her Philippine citizenship (unless the law of her husband’s country makes her assume the citizenship of her husband because of such marriage) and can therefore acquire real estate in the Philippines.
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ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS

1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds   (such as foreclosure, execution or tax delinquency sale)
2. Maximum area that may be acquired:
a) For residential purpose – 1,000 square meters of urban or one hectare of rural land.
b) For business purpose – 5,000 square meters of urban land or 3 hectares of rural land.Business purpose refers to the use of land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry, and services, including the lease of the land but excluding the buying or selling thereof.

FOREIGN OWNERSHIP OF CONDOMINIUM UNIT

In the condominium concept of ownership, absolute ownership by a foreigner is allowed not to exceed forty percent interest in the project. The unit owner is the absolute owner of the space within the interior surface of his unit, but is only a co-owner of the exterior façade of the unit.
RIGHTS OF A CONDOMINIUM UNIT OWNER

Absolute ownership of his unitCo-ownership of land and common areasExclusive easement of the space of his unitNon-exclusive easement to common areas for ingress or egressRight to sell, lease, or mortgage his unitRight to repair, paint, decorate the interior surface of his unitRight to participate and vote in condominium corporation meetings

OBLIGATIONS OF A CONDOMINIUM UNIT OWNER

Pay the realty tax on his unitPay the insurance on his unitPay the shared monthly dues for maintenance of common areas/amenities/garbage disposalComply with use restrictions

RIGHT TO REFUND UNDER MACEDA LAW AND P.D. 957

MACEDA LAW - Right to refund applies as a requisite for cancellation of contract due to delinquency when the buyer has paid at least two years. Refund is 50% of total payments; additional 5% per year after 5th year.

PRESIDENTIAL DECREE 957 -

Right to refund applies when the developer fails to complete the development within the required period. Refund is 100% of total payments less penalty interest.