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Can a Foreigner Own a Property in the country?

Welcome, Mabuhay!

Many foreigners have always considered the Philippines to be their second home. After all, why not? The people here are hospitable. The country’s cost of living is relatively inexpensive. It is also undeniable that the Philippines is rich in natural attractions, and you will never run out of exciting places to visit if you decide to reside here.

If you’re a foreigner who sees these things as a benefit, it’s possible that owning a property in the Philippines has crossed your mind. Then, this guide is for you.

Is it possible for a foreigner to buy a property in the Philippines?

Yes, but only under certain conditions. A non-Filipino can buy a property in the Philippines. However, there are restrictions on what type of property and how much they can spend.

Foreigners are not allowed to own land in the Philippines by law. Filipinos can only own land. Despite the demand from expatriate groups to modify the law, it remains in place. Non-Filipinos can still own land through their husbands, who are Filipino nationals.

Exceptions to The Law That Allow Foreigners to Buy land in The Philippines

The Property was Obtained Before the 1935 Constitution

A foreign citizen who was able to purchase and own land before the 1935 Philippine Constitution was enacted will keep their ownership rights on that property.

Even though the 1987 Philippine Constitution has replaced the 1935 Constitution, the current Constitution nevertheless recognizes a non-Filipino citizen’s right to use and own property, including land, as long as it was obtained before the 1935 Constitution.

Hereditary Succession

The Philippine Constitution of 1987 expressly prohibits foreign citizens from acquiring land in the Philippines. However, the same Constitution’s Article XII, Section 7 contains a modest provision that permits heirs to obtain property, even if the heir is a foreigner.

The relevant section of the 1987 Constitution reads as follows:

“Section Seven” (Article XII). 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.”

Simply put, if a foreign citizen is a legal or natural heir through hereditary succession and was lawfully included and instituted in a property owner’s “Last Will and Testament,” then that foreigner is permitted to receive that real estate property under Philippine law.

  • Intestate Succession Order Under Philippine Law
  • A deceased person’s legitimate children or descendants;
  • Parents or ascendants who are legitimate;
  • Children or descendants of illegitimate parents;
  • A spouse who is still alive;
  • Nephews and nieces; siblings (brothers and sisters);
  • Other fifth-degree collateral relations

Is it possible for a foreigner unrelated to the landowner to be legally named an heir to the land in the final will and testament?

This is against Philippine law. Foreign citizens can only inherit land through hereditary or intestate succession (dying without leaving a will).

Testamentary succession, or inheriting land just because one’s name appears in a will, is not permitted. Current laws prohibit this because it could be used to violate the Philippine Constitution’s provisions. If this were allowed, foreigners might pay any landowner to name them as testamentary heirs, allowing them to inherit and possess the land.

Owning a Condominium Unit

This third situation is likely the most straightforward to comprehend, as it is the most common manner for a foreigner to own property in the Philippines.

Foreign citizens can own condo units in any condominium building under the Philippine Condominium Act, or Republic Act (RA) 4726, as long as foreign ownership of the project does not exceed 40%.

So, suppose the following groups of foreigners, for example, purchased MesaVirre Garden Residences units:

  • 20 Indian citizens purchased a total of 20 condo units.
  • 8 American citizens purchased a total of 16 condo units.
  • A Chinese citizen purchased four condo apartments for a total of four units.
  • The total number of condo units held by foreigners at MesaVirre Garden Residences is 40.

A Corporation’s Purchase

Forming a local corporation is a valid and legal loophole used by foreigners seeking to purchase land in the Philippines. This only necessitates the formation of a corporation and its registration with the Securities and Exchange Commission.

The only stipulation is that the corporation must still adhere to the 40 percent foreign ownership guideline, which implies that Filipinos must still own a majority stake in the company – at least 60 percent.

The corporation can now buy any real estate property, including land, houses and lots, condominium units, and commercial structures, once it has been recognized by the SEC. The foreigner can benefit from the purchased property as a part-owner of this corporation. However, the foreigners’ overall ownership share in the company is limited to just 40%.

A Foreigner Who was a Natural-Born Filipino

Purchase by a former naturalized Filipino citizen is subject to legal restrictions. (Natural-born Filipinos with foreign citizenship can own up to 1,000 square meters of residential land and 1 hectare of agricultural or farmland.)

A Foreigner Married to a Filipino

If a foreigner marries a Filipino citizen, the foreigner is permitted to purchase land; but, there is a catch! — the land title (known as the TCT or Transfer Certificate of Title) will be in the Filipino spouse’s name. The foreigner’s name may appear in the contract or deed of sale but not in the TCT or property title.

Although the foreigner may have bought and acquired the land, he does not “own” it.

Conclusion

In the Philippines, foreigners are not permitted to own land. They are, however, allowed to own a home. Under the Philippine Condominium Act, foreigners can acquire condo units as long as Filipinos own 60% of the building. A foreigner can also purchase a property through a corporation if the corporation is held by Filipinos at least 60%.

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