Buying land in Philippines

Okieboy summed it up perfectly.

You can examine all the schemes and dreams about ownership here but my advice based on having lived here since 2008 is this. Don't invest one penny in anything in the Philippines that you can't afford to lose (land or business).

It is my opinion that a serious plan to purchase land that involves any expat MUST include the seldom discussed but legally required "Certificate of Paraphernal Property".   To be as clear as possible:
1. "Paraphernal Property is property that solely belongs to either the husband or the wife only."
2. "Paraphernal Property is not part of the conjugal property or absolute community property."
3. "The fruits of a Paraphernal Property redounds [overflows, to become transferred or added] solely to the owner thereof. Even if the fruits accrued during the marriage."

The expat must review Republic Act No. 386 - Chapters 1, 2 & 5 to act under the law.  Any person wanting to sell land to the expat and does not review this requirement may not be the person to trust in any land deal.  So many are not aware that an expat's spouse is forced to lie when this document is executed, in that it is a declaration which states that the property was purchased by the Filipino spouse with his or her own money, therefore making it "paraphernal property".  This is why the TCT, in such cases, is executed, and the property registered, in the name of the Philippine citizen or former natural-born Philippine citizen, with the spouse's name indicated as being "married to" that Philippine citizen or former natural-born Philippine citizen.  This has been adjudicated to mean that it is "merely descriptive of the civil status of the registered owner" and is not conjugal property.  There is a related SC case that touches on some of these aspects in JOSEPHINE G.R. v. MENDOZA GO & HENRY GO No. 160762.  This allows for the expat to be legally "excluded" in any property dispute should a marriage termination occur.  [forewarned is forearmed]

Note:  This is not a new concept for just Asia or the PI,  even the U.S. state of Louisiana has a related law that states:  "After January 1, 1980 all property acquired by the wife that is not community property is neither dotal nor extradotal. It is her separate property." [La. Civ. Code art. 2341]

Just as a reminder - Republic Act No. 9646 – The Real Estate Service Act of 2009 requires home buyers to buy properties from licensed real estate brokers only that are registered with the Professional Regulatory Board of Real Estate Service.  The expat should have a working knowledge of and contact info for the Philippine Association of Real Estate Boards (PAREB).   You can check to determine if your real estate broker or sales agent is licensed or registered with PRC via this link.

It is not my intent to place an expat on this path or to suggest the expat remove him/herself from this path.......  Your path selection is not my call to make!  Always be aware and best wishes to all on this path!

I see why the Philippines does not want foreign ownership, big business would move in and run Filipino business out, Wal-Mart would take most retail out, they have been sued for selling below cost to run competition out many times, I don't know how McDonald's handles it here they are one of the biggest real estate holders in the world, they feed 1% of the world's population every day

Okieboy hit the spot and jonnyboy is right. But change is coming guys.

Calif-native -that sounds nice. Can you help me make a profound trial contract that would meet both parties expectations and agreement. We can make this as a future base solution. Let´s say the trust part is solved so whats next?

1.) Certificate of Paraphernal Property - sounds nice
2.) We can add Authorization letter (Internal) that entitles the foreigner to have full authority over the developments on the said land which includes selling, leasing and to let someone inherit it and more. Mining or similar are not allowed.
3.) Land to be purchased only by name by a filipino; thus ownership is to the foreigner. We can make a separate contract certified by lawyer (External). This would bound both parties to follow the agreement.
4.) Leasing Contract (Internal)- 50+25+25 renewable. This document may not be necesarry thou. But for the right person and price, are you willing?
5.) Special agreement (External) between the foreigner and on person the land is named on. Title and or deed of Sale is not transferable or saleable without the consent of the foreigner.
6.) Lets say im a filipino normal joe and i am offering and willing to help you guys coz i really don´t give a shit. It´s love baby ;D

If you can add more ideas, it would be great.

@ Darkblood,

Please understand that my intent is to inform/help expats and not make a business venture or get involved in illegal activities here.  Clearly, you have suggested steps that are considered by most to be both illegal and in violation of the Anti-Dummy laws of the Philippines.  Reminder - The Anti-Dummy Law "is a law created to penalize those who violate foreign equity restrictions and evade nationalization laws of the Philippines."

If you intend to do most of the steps you listed as options, I strongly advise against attempting such things and will never participate in such activities myself.  However, if your heart is set on such activities, you will need to retain a "very good and trusted" atty, an oxymoron for sure. 

To end on a noteworthy point:  "The Anti-Dummy Law prohibits an arrangement that is usually done by a foreigner to evade nationality restrictions."  If you're caught violating the Anti-Dummy Law, your jail sentence ranges from 5 up to 15 years, in addition to a very large fine.  Both expats/ Non-Citizens and Filipino citizens who engage in a dummy arrangement will both be held liable.   

I strongly suggest you study and use the following as your investment guide and pay very close attention to the part that reads,

"and any person who knowingly aids, assists or abets in the planning, consummation or perpetration of any of the acts hereinabove enumerated shall be punished by imprisonment for not less than five nor more than fifteen years and by a fine of not less than the value of the right, franchise, or privilege enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos"

See:  PRESIDENTIAL DECREE No. 715 May 28, 1975, AMENDING COMMONWEALTH ACT NO. 108, AS AMENDED, OTHERWISE KNOWN AS "THE ANTI-DUMMY LAW

COMMONWEALTH ACT No. 108
AN ACT TO PUNISH ACTS OF EVASION OF THE LAWS ON THE NATIONALIZATION OF CERTAIN RIGHTS, FRANCHISES OR PRIVILEGES

Section 1. Penalty — In all cases in which any constitutional or legal provisions requires Philippine or any other specific citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege, any citizen of the Philippines or of any other specific country who allows his name or citizenship to be used for the purpose of evading such provision, and any alien or foreigner profiting thereby, shall be punished by imprisonment for not less than five nor more than fifteen years, and by a fine of not less than the value of the right franchise or privilege, which is enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos.

The fact that the citizen of the Philippines or of any specific country charged with a violation of this Act had, at the time of the acquisition of his holdings in the corporations or associations referred to in section two of this Act, no real or personal property, credit or other assets the value of which shall at least be equivalent to said holdings, shall be evidence of a violation of this Act.1

Section 2-C. The exercise, possession or control by a Filipino citizen having a common-law relationship with an alien of a right, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the Philippines, shall constitute a prima facie evidence of violation of the provisions of Section 2-A hereof.5

Answer:  To bad then..but reading thru this makes you really think..hmmm most filipino married to a foreigner (common-law relationship) and purchased land properties with the exact wordings above. I think when purchasing forced to lie that the money to finance it is theirs. What do you think? Correct me if im wrong.

Question:
Lets say i am a normal filipino guy and i will purchase or already have a land and want a foreigner to stay/use/build/lease it. Is this workable? Thanks for the heads-up guys.

If you are not married to a Filipino, life can be harder. The house, farm and empty lot is all in her name. No headaches.

@Extremerecluse - That being said is in direct violation of the Anti-Dummy laws of the Philippines unless the filipino person had enough personal funds to back up the story. But the main thing is that mostly a blind eye is shown even before a court or lawyer and the law is not stable in the philippines that in which it is generally overseen in a Filipino perspective "Its OK no problem cuz everything or the control or general benefit is to all Filipinos ONLY at the end". If they see you as a foreigner poking around for "control, benefits, rights or previlege or the exercise or enjoyment" then many hateful eyes will turn against you and then hereby the law will suddenly take into effect. In the philippines, there is a saying: "LAW IS ONLY FOR THE RICH" that is why there is a lot of corruption and non-law abiding citizens, crime rate is high due to poverty, and NO small or poor guy no matter how right he/she is, can go against a person with money. In the philippines its common saying money talks. At the end: if you have the 3 main properties: Money, Control and Smart; your basically untouchable or successful. Hope this is helpful.

So what if my wife and I want to build our 2nd home and to have a small farm to grow our own food. Show me how that is illegal.

My Filipino wife makes more $$$ than I. I guess that nullifies your response. Thanx for your legal concerns.

My Filipino wife happens to earn more $$$ than I do. Thanx for your legal concerns.

@ Extremerecluse,

As all are aware of, a foreigner can never buy or own a land in the Philippines under our name even if we are married to a Filipina (except upon death).  However, your wish to build a house on a 2nd property owned by  your wife is 100% legal.  With the correct rental or lease document, you can have have up to 100% ownership of any building, structure or improvement(s) on the land.  This topic is best understood with including the need for a "Last Will and Testament" for ultimate protection of the expat.

First, a lease agreement should include the fact that the foreigner owns or has joint ownership of the house or building and any improvement on the land.    Of course you need to have a contract of lease with the land owner that states the above along with the requirement that the foreigner's name appears on the Tax Declaration document for the buildings and improvement(s), but not the land TD.   

Second, "Last Will and Testament" - The foreign spouse's name cannot be on the property Title (as owner) but can be on the contract to buy the property, where it is very important to document the process used to obtain such asset, so that in the event of death of the Philippine spouse, the property will not automatically pass to deceased spouse's Philippine heirs and or relatives due to her estate being intestate (i.e., without a will). 

The "Last Will and Testament" will allow for the surviving foreign spouse to remain unmolested on the property or have a “reasonable” amount of time to dispose of the property and collect the proceeds, should he decide to do so.  This is where the 1987 Constitution of the Philippines and the 1949 Civil Code inherited from Spain shows in Section 7 of the Article where it allows foreign citizens to own land by way of legal inheritance.

"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."

As a side note:  It is my opinion that the expat and his/her spouse should each have a "Last Will and Testament" executed, it can include the directions that no other filipino family members are to inherit the assets, land (when justified) or buildings, but it can't include the transfer of land ownership to the expat via that executed "Last Will and Testament", as it is considered "testamentary succession" which is not legal and is considered unconstitutional;

"We are of the opinion that the Constitutional provision which enables aliens to acquire private lands does not extend to testamentary succession for otherwise the prohibition will be for naught and meaningless. Any alien would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece of land."

Ref. Ramirez vs. Vda. de Ramirez, G.R. No. L-27952, February 15, 1982.   

Third - Why a focus on the importance of a "Last Will and Testament" and the expat's inheritance rights?

Should the expat's Filipino spouse pass away without a will, here are the legal inheritance rights of surviving foreign expat spouse:

In the case of an expat's wife that passed, he can inherit property (including land), subject to the shares of her surviving relatives.

1) If the Filipina wife were to pass away with none of her parents or siblings still living, the foreign widower would be entitled to his wife's entire estate.

2) If the Filipina wife were to pass away with her parents and siblings still living, the foreign widower would be entitled to half his wife's estate and her parents to the other half.

3) If the Filipina wife were to pass away after her parents had already passed away and with her siblings still living, the foreign widower would be entitled to half his wife's estate and her siblings to the other half.

Clearly, the "Last Will and Testament" is a key part of any expat securing the home and property should they survive the Filipino spouse and not want to suddenly have legal demands from her family members wanting to move in and or take their shares and/or forcing a sale of the home/properties. 

Some filipinos may not want to talk about this or prepare a "Last Will and Testament" for this eventual reality of life.  Good luck to all!

Lots of wrong info here.

Foreigners simply cannot own land here with two exceptions. They owned it prior to the 1935 Constitution; I am guessing that this is very rare here. Someone owning land in 1935 would have to have been at least 20 years old which would make them over 100 now. They could have willed the land to foreigners but only sold it to a local.

Foreigners can own land through succession. That is if you your Filipina spouse dies you can inherit the land, you can then bequeath it to your children but if sold it has to be sold to a citizen.

Corporations here have to be 60% Philippine owned, so that will not get you around the law.

Long term leases are 25 plus 25 years for a total of 50 years for residential properties, the longer periods cited in several posts are for investment properties like building a factory or a resort.

Foreigners can own condo's outright but the total in a condo complex cannot exceed 40% foreign ownership.

You cannot put the property in the spouses name and take a long term lease back. Being married means you cannot have a contract with your spouse.

There are strong anti-dummy laws so any contract or scheme that you can think of to circumvent the laws will easily be declared void from the start and the land will revert to the original owner, good luck getting back your purchase price.

Any court proceedings here will be decided on the basis of who can pay, not what is the law, as an obviously rich foreigner you can afford to pay for the obviously poor local so you will lose. This applies even if the local is richer than you.

IMHO there are only two viable options for long term residence here. One is take an annual lease and pay periodically with renewals. This does not give you long term security of residence but does not tie up long term capital.

Takes a 25+25 year lease. It will cost the same as a purchase but after 50 years the property reverts to the owner.  It will tie up capital and the contract may be voided if there is something wrong with the wording of the lease or there is a dispute on the title. The foreigner will lose.

In every case watch out for land fraud. There are signs around Manila saying this property is not for sale, beware fake titles. Do you think these signs would exist in a country where there are strong land title and ownership systems in place?

Lots of property here does not have clear titles. Yes great grandpa had a title but when he died, without a will,  no one put the land in grandpa's name, and when he died, also without a will,  no one put the land in the names of dad and the uncles, some of who have died without wills.  Who has the legal claim on property that has been in a family for a few generations will be very complex and can take years to sort out because the extended family has simply lived there moving in and out as needed, adding out buildings sometimes on the land sometimes encroaching other lands with no one having any idea except that it is family land. Great grandpa may not have had a title, it could just have been the traditional place where the family has always lived.

Personally I will only take a long term lease from an established company such as Subic Bay Housing (former US Navy base). I am not going to put out a few million p based on a land title system I don't understand in a country where land fraud is a national pastime.

I will take the risk of renewable one year leases where I would pay no more than a year in advance or buy a condo in an appropriate development. If necessary I'll be ready to move out in a hurry and if I have to leave behind some furniture, it will not be usable.

‘

As I have stated if you and your wife have property in both your names
no problem if you die, but if she dies the estate if a decesed Filipino cannot be disposed of because Philippine law reserve's them for their heir's

Compulsory heir's her legitimate children and or descendants are primary

Secondary legitimate parents , illegitimate parents

Concurring surviving spouse

So if your wife dies your going to have partner in ownership unless your the only surviving heir

All very valid Points Manitobah as we know. It appears that buying a condominium if you are a foreigner is the way to go but firstly you pay millions of pesos to secure a chunk of concrete sitting above Filipino land, (as we do) then you pay association dues and in 50 years they pull the building down because it is beyond repair (association dues/fees mismanaged) with no recourse, not really any different to a long term lease.
In saying this, my little rant, if I wanted to live in a city then I would go condo and accept the fact that I had rules and conditions imposed upon me after spending a lot of money and would continue to do so.
Being a country bloke I prefer space and not necessarily complying with too many rules and conditions. Then there comes the point of where you actually want to live, my/our choice is 5 hours north of Manila and there are no condo's for sale, difficult enough to find beachfront property, our choice.
Regardless after 50 years you have blown/lost a similar amount of dollars, really it comes back to where you want to live, do you wish to leave a legacy or let your heirs watch your investment being torn down?

Renting is great short term if you are on the move or trying to sort out where you really want to be or lack initial capitol but if you find a great place that you see as you nirvana then try to secure it even if after 50 years you lose it (hey I certainly won't be around) but your loved one or friend that helped you will benefit instead of paying rent to some twit you hate.

Cheers, Steve.

Okieboy wrote:

As I have stated if you and your wife have property in both your names
no problem if you die, but if she dies the estate if a decesed Filipino cannot be disposed of because Philippine law reserve's them for their heir's

Compulsory heir's her legitimate children and or descendants are primary

Secondary legitimate parents , illegitimate parents

Concurring surviving spouse

So if your wife dies your going to have partner in ownership unless your the only surviving heir

Simple, marry a spinster with no surviving relatives, I'm sure they are about. Life is a gamble. In all honesty why do we move to the Philippines? Is it the Mojo or the people? For me it is a cheap country to live with great people and affords us a lifestyle we are accustomed to. Stay in Oz and I will be working another 6 or 8 years,,,,,,,, retire then die probably.

Cheers, Steve.

In order to not confuse expats on how to inherit land, I did not get real detailed in my last post on this topic.  However, if any felt my "short" post was misleading or incomplete, please accept my apologies. 

In my view, this topic involves details that are seldom discussed in any blog and can leave the expat even less informed.  It is easy for us to say in blogs what we can or can't do, but seldom do we see details on the question of how the foreigner can get his or her land via an inheritance (what are the main steps).  I am attempting to remedy this void to a small degree and advise all that the outlined info below is not intended to be a "authoritative answer", "fix" or "just do this and you are good to go" set of instructions.  I helped one expat on this topic and learned so much along the way... a summary of my views and steps are now shared (YMMV):

Question: Sadly, the expat's filipino spouse passes without a will; is that land just automatically his/hers with title (TCT) and TD changes completed and a new title issued to the expat where the expat can say, "Here is my name only on a new TCT as sole owner?"

Assumptions:  The expat's filipino spouse has land/house that is properly titled in the filipino spouse's name along with TD's that are corresponding to the TCT in question.  If this is not the case, this may only be an interesting read.  The other case(s) may be another book and will require more than just a casual read to even begin such a journey.

Answer: First of all, the foreigner must take the time to understand and properly prepare a few documents which include:

1.  Affidavit of Adjudication by Sole Heir.

2.  Affidavit of Adjudication or Extrajudicial Settlement.

3.  Expat must submit a Notice of Death within two months from the fact of death.

4.  Expat must file an Estate Tax Return and pay within six months from the required tax date, together with supporting documents, with the Regional District Office of the Philippine Bureau of Internal Revenue.  Check with local BIR to get supporting documents they may want to see.

5.  Resolve rights with heirs (this is where death with or without a will will make a difference):

A.  If the Filipino spouse passed with only one heir, the expat needs to make sure that heir executes an Affidavit of Adjudication.

B.  If the Filipino spouse passed with more than one heir and they agree among themselves to partition the estate of the deceased, they are required under Philippine law to execute an Extrajudicial Settlement of Estate with Partition.

In either case, it's required that the decedent be debt free or, if he or she left debts, that they are fully paid prior to the process being completed.

C.  The expat needs to make sure the new "estate tax" is paid in full and on time.  An Estate tax in the PI is considered a "tax  imposed on the privilege of transmitting property upon the death of the owner".  This is NOT a property tax.

D.  Does the expat understand Legal or intestate succession (no Last Will & Testament executed) as set forth in the New Civil Code (NCC), Articles 960 and 961 vs. Testamentary succession (a Last Will & Testament executed)?

E.  Does the expat understand Disinheritance as set forth in the New Civil Code (NCC), Articles 915, 919, 920 & 921?

6.  After the above steps are completed, taking either of the documents used (Affidavit of Adjudication or Extrajudicial Settlement), the expat needs to make sure these documents are published once a week for three consecutive weeks in a newspaper of general circulation in the province or city where the deceased last resided.

7.  The expat needs to make sure the "Notice of Death" was filed within two months from the actual death, even if the other items are taking longer.  Getting a Death certificate within 2 months can be a problem (the request needs to be expedited including paying a driver's delivery fee and it can yield a result in 10 days or so).

8.  The expat needs to confirm that Bureau of Internal Revenue is satisfied with all requirements and that they will issue a Certificate Authorizing Registration. 
Note: This is a document required to be submitted to the local Registry of Deeds by the BIR but they may need prompting to send it or to provide the expat with an official copy.

9.  The expat must go to the Registry of Deeds, pay the registration fees and surrender the title (still in his/her deceased  spouse's name), in order for a new title (TCT) to be issued.  Based on the above listed heirs, the new title will list each heir in accordance with their legal percentage of the estate.  This title will also have a clause regarding “Liabilities of Heirs” pursuant to Section 4, Rule 74 of the Rules of Court of the Philippines which will remain recorded on the land title for two years.

Again, the above is meant to provide some clues to an otherwise clueless topic; often tossed around with many incomplete statements.  There are many other details that will cause the expat to bounce down different paths along the way and could require that often spoken of oxymoron of "finding a good atty" to assist/direct the expat's needs.  The above actions will not be easy and are often not well understood by local authorities........  best wishes to all that find themselves in need of such help.

P.S.  All of the above directly ties into my posts on leasing the land and owning the house/buildings on the land (including lease terms that legally allow the lease surviving the lessor).

Well I think that's not fair when they come to Canada they can buy land with no restriction so if it's not possible for us it should be the same for both sides

This is The Philippines - nothing's fair if you are expat

Binne wrote:

Well I think that's not fair when they come to Canada they can buy land with no restriction so if it's not possible for us it should be the same for both sides

Canada has many square miles of useless land while the population of the Philippines is over 100,000,000.  Do the math, has nothing to do with fair.

What specific law you talking about? If that was the case there would be foreigners owning land and I have never heard of that.
I don't think foreigners can own land.
In fact a condo building must have 60 percent of the condos owned by Filipinos, so the whole building can't be foreigner owners.

Binne wrote:

Well I think that's not fair when they come to Canada they can buy land with no restriction so if it's not possible for us it should be the same for both sides

You're forgetting about the fact that Philippines is poor and if foreigners could buy land without restriction they would undoubtedly buy all of the good land - near the beaches, on the mountains, all the prime farmland, etc. The local could not compete. That situation is what would not be fair.