Restrictions to foreigners on property ownership in RP

Published by rudy Date posted on February 13, 2009

Dear PAO,

Good day. I am a Canadian and I read with great interest your answer that was published on January 12, 2009 in The Manila Times about dual citizenship and buying property in the Philippines.

I am married to a Filipina who became a Canadian citizen in 1992. I want to buy a condominium unit in the Philippines. Are there any restrictions? What about staying (not permanent) visa?

Thank you for your help. Are your answers archived? Are they available on the internet?

Thanks again.

Jean Paul Leblond

Dear Mr. Leblond,

Foreigners are prohibited from acquiring public and private lands in the Philippines. No less than the 1987 Philippine Constitution proscribes ownership of these lands by aliens as provided in Sections 2 and 7, Article III thereof. However, Section 7 of the same Article allows former natural born Filipinos who have lost Philippine citizenship, to acquire private lands in the Philippines with a maximum area as may be provided by law.

Republic Act (R.A.) 7042 as amended by R.A. 8179 or the Foreign Investment Act of 1991, is the most recent law defining the maximum area of a private land in the Philippines which a former natural born Filipino may acquire. Section 10 thereof provides:

“Section 10. Other Rights of Natural Born Citizen Pursuant to the Provisions of Article XII, Section 8 of the Constitution. – Any natural born citizen 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 five thousand square meters in the case of urban land or three hectares in the case of rural land to be used by him for business or other purposes. 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.

 Xxx”

Likewise, R.A. 9225 or the Citizenship Retention and Re-acquisition Act of 2003 facilitates the re-acquisition of Philippine citizenship by a former natural born Filipino without having to give up his current nationality. Once Philippine citizenship is re-acquired through this law, the recipient shall be entitled again to all the rights and privileges enjoyed by every Filipino, with the concomitant obligations and responsibilities.

Assuming that your wife is a former natural born Filipino, she is entitled to the above privileges. She may outright buy a real property in the Philippines subject to the above limitations or re-acquire Philippine citizenship and enjoy all the rights and privileges every Filipino is entitled to but with the attendant obligations.

On the other hand, if you are keen on acquiring a condominium unit in the Philippines in your capacity as a foreigner or alien, you may do so provided certain conditions are followed. The purchase of a condominium unit by a foreigner or an alien, is valid, as long as the common areas of the said condominium is owned or held by a corporation at least sixty percent of the total capital stock of which is owned by Filipino citizens.

In the case of Jacobus Bernhard Hulst versus PR Builders, Inc. (G.R. No. 156364, September 25, 2008), the Supreme Court of the Philippines had the opportunity to explain the validity of ownership of a condominium unit by a foreigner or non-Filipino citizen, to wit:

“Under Republic Act No. 4726, otherwise known as the Condominium Act, foreign nationals can own Philippine real estate through the purchase of condominium units or townhouses constituted under the Condominium principle with Condominium Certificates of Title. Section 5 of R.A. No. 4726 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 where 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 corporations at least 60 percent 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. (Emphasis supplied)

The law provides that no condominium unit can be sold without at the same time selling the corresponding amount of rights, shares or other interests in the condominium management body, the Condominium Corporation; and no one can buy shares in a Condominium Corporation without at the same time buying a condominium unit. It expressly allows foreigners to acquire condominium units and shares in condominium corporations up to not more than 40 percent of the total and outstanding capital stock of a Filipino-owned or controlled corporation. Under this set up, the ownership of the land is legally separated from the unit itself. The land is owned by a Condominium Corporation and the unit owner is simply a member in this Condominium Corporation. As long as 60 percent of the members of this Condominium Corporation are Filipino, the remaining members can be foreigners.”

In so far as your stay in the Philippines is concerned, you will not be needing a Philippine visa upon your arrival, provided you are accompanied by your spouse who was a former Filipino citizen in accordance with R.A. 7668. Under the said law which is entitled an Act Instituting a Balikbayan Program, particularly Section 3 (c) thereof, a balikbayan and his family shall be entitled to visa-free entry to the Philippines for a period of one year for foreign passport holders. The aforecited law defines balikbayan and his family, as follows:

“Section 2. Definition of Terms. – For purposes of this Act:

a. The term balikbayan shall mean a Filipino citizen who has been continuously out of the Philippines for a period of at least one year, a Filipino overseas worker, or a former Filipino citizen and his family, as this term is defined hereunder, who had been naturalized in a foreign country and comes or returns to the Philippines; and

b. The term “family” shall mean the spouse and the children of the balikbayan who are not balikbayan in their own right traveling with the latter to the Philippines.”

You may also avail the 21-day visa free entry to the Philippines pursuant to Executive Order No. 408 (Issued on November 9, 1960). However, if your stay here is for more than 21 days but not less than 59 days, you may apply for visa upon arrival at the airport of entry instead of securing a visa waiver at the Bureau of Immigration’s main office or its field offices. (BID Memorandum Circular No. MCL-08-003). Otherwise, you have to visit the said office to apply for visa if you intend to stay longer than the above mention period.

We hope that we were able to answer your queries.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net or via text message (key in: Times dearpao <YOUR QUESTION> and send to 2299).

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