Whether Foreign Individuals and Foreign Businesses Are Allowed to Own Land in the Philippines

DOJ OPINION NO. 038, s. 2018 July 17, 2018 Hon. Undersecretary Manuel Antonio J. Teehankee Office of the Undersecretary for International Economic Relations Economic Diplomacy Unit Department of Foreign Affairs 2330 Roxas Blvd. Pasay City Dear Undersecretary Teehankee : This pertains to the request for opinion of then Undersecretary Laura Q. del Rosario pursuant to an email inquiry from the Philippine Consulate General, Changning District, Shanghai, People's Republic of China regarding land ownership in the Philippines by foreigners. Undersecretary del Rosario was seeking guidance on pertinent laws on foreign ownership on freehold and the convertibility of leasehold into freehold to allow foreign ownership of land in the Philippines. She also wished to be apprised on whether foreign individuals and foreign businesses are allowed to own land in the country. In responding to the query, we must distinguish between ownership of land of the public domain and ownership of private land. HTcADC Sections 2 and 3 of Article XII (National Economy and Patrimony) of the 1987 Philippine Constitution are the pertinent provisions with regard to ownership of land of the public domain. Thus, it is stated: Section 2 . 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. With the exception of agricultural lands, all other natural resources shall not be alienated. x x x. Section 3 . Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or grant. Based on the above-mentioned provisions, it may be concluded that: 1) Only agricultural lands of the public domain may be alienated; 2) Filipino citizens may acquire alienable lands of the public domain subject to the limitation; 1 and 3) Private corporations or associations may not acquire alienable lands of the public domain but may lease such lands, subject also to certain limitations. As to ownership of private land, we refer you to Sections 7 and 8 of the same Article XII of the 1987 Philippine Constitution, which state: Section 7 . 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. Section 8 . Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law. CAIHTE Based on the above-cited provisions, it may be concluded that: 1) Private lands may be acquired only by individuals or corporations who are qualified to acquire lands of public domain, i.e. , Filipino citizens or public corporations or private corporations or associations; 2 and 2) Private lands may be acquired by a person other than said qualified individual or corporation, only by hereditary succession. Please note that Sections 22 and 23 of Commonwealth Act No. 141 (C.A. No. 141) provides for the basis for item (1) above, to wit: "Sec. 22. Any citizen of lawful age of the Philippines, and any such citizen not of lawful age who is a head of a family, and any corporation or association of which at least sixty per centum of the capital stock or of any interest in said capital stock belongs wholly to citizens of the Philippines, and which is organized and constituted under the laws of Philippines, and corporate bodies organized in the Philippines authorized under their charters to do so; may purchase any tract of public agricultural land disposable under this Act, not to exceed one hundred and forty-four hectares in the case of an individual and one thousand and twenty-four hectares in that of a corporation or association, by proceeding as prescribed in this chapter: Provided, That partnerships shall be entitled to purchase not to exceed one hundred and forty-four hectares for each member thereof. But the total area so purchased shall in no case exceed the one thousand and twenty-four hectares authorized in this section for associations and corporations. x x x Sec. 23. No person, corporation, association, or partnership other than those mentioned in the last preceding section may acquire or own agricultural public land or land of any other denomination or classification, which is at the time or was originally, really or presumptively, of the public domain, or any permanent improvement thereon, or any real right on such land and improvement. x x x" Thus, in order for a corporation to purchase, acquire or own land in the Philippines, it has to comply with the sixty percent (60%) requirement, which means that at least sixty percent (60%) of the total capital stock of the corporation must be wholly owned by Filipino citizens. As to the individual who was a natural-born Filipino citizen but has lost his citizenship, Section 2 of Batas Pambansa (BP) Bilang 185 3 allows him to be a transferee of a private land, subject to the limitations provided therein, i.e. , the ownership of an urban land shall be limited to 1,000 square meters, while for rural land, it must not exceed 1 hectare and must be used exclusively for residential purpose, thus, we quote Section 2 of BP 185 as follows: Sec. 2. Any natural-born citizen of the Philippines who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private land up to a maximum area of one thousand square meters, in the case of urban land, or one hectare in the case of rural land, to be used by him as his residence. In the case of married couples, one of them may avail of the privilege herein granted; Provided, That if both shall avail of the same, the total area acquired shall not exceed the maximum herein fixed. aScITE In case the transferee already owns urban or rural lands for residential purposes, he shall still be entitled to be a transferee of additional urban or rural lands for residential purposes which, when added to those already owned by him, shall not exceed the maximum areas herein authorized. For investment purposes, Section 10 of Republic Act (R.A.) No. 8179 4 provides for conditions for land acquisition by former Filipinos. Under this law, a former Filipino citizen may be a transferee of a private land up to a maximum area of five thousand (5,000) square meters in the case of urban land or three (3) hectares in the case of rural land to be used by him for business or other purposes. The said provision also states that if in case the transferee already owns urban or rural land for business or other purposes, he shall still be entitled to be a transferee of additional urban or rural land for business or other purposes which when added to those already owned by him shall not exceed the maximum areas herein authorized. Said transferee may also acquire not more than two (2) lots which should be situated in different municipalities or cities anywhere in the Philippines: Provided, That the total land area thereof shall not exceed five thousand (5,000) square meters in the case of urban land or three (3) hectares in the case of rural land for use by him for business or other purposes. A transferee who has already acquired urban land shall be disqualified from acquiring rural land and vice versa. On the other hand, R.A. 4726 5 allows foreign nationals to own Philippine real estate through the purchase of condominium units or townhouse constituted under the condominium principle, particularly Section 5 thereof which states: Section 5 . Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interest in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation; Provided, however, That were the common areas in the condominium project are held by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens or corporation at least 60% of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws. Thus, Section 5 of R.A. 4726 expressly allows foreigners to acquire condominium units and shares in condominium corporations up to not more than 40% of the total outstanding capital stock of a Filipino-owned or controlled condominium corporation the land on which the condominium project is situated is owned by the condominium corporation. R.A. 4726 allows the transfer to a foreign national of an interest in a unit in the said condominium, and of an undivided interest in the common areas thereof, subject to the qualifications stated in said Section 5. As long as 60% of the members of the condominium corporation are Filipinos, the remaining members can be foreigners. DETACa As can be gleaned from the foregoing laws, ownership of land in the Philippines is highly-regulated and is reserved solely for persons or entities considered Philippine nationals or Filipino citizens. Hence, foreigners are generally not allowed to own land except in instances mentioned herein. Please be guided accordingly. Very truly yours, (SGD.) MENARDO I. GUEVARRA Secretary Footnotes 1. Page 1191, The 1987 Constitution of the Republic of the Philippines: A Commentary, Joaquin G. Bernas, S.J., 2009 Edition. 2. Executive Order No. 184, s. 2015, citing Article XII, Section 7 of the 1987 Constitution, Chapter 5, Section 22 of Commonwealth Act No. 141 and Section 4 of Republic Act No. 9182. 3. An Act to Implement Section XV of Article XIV of the Constitution and for other purposes. 4. An Act to Further Liberalize Foreign Investments, Amending for the purpose Republic Act No. 7042, and for other purposes. 5. The Condominium Act.