9.20.2019

Can A Foreigner Buy Land In The Philippines?

Can A Foreigner Buy Land In The Philippines?



Disclaimer


This is not legal advice. It's just me giving you a window in to my thinking as I attempt to understand what Philippine laws mean to me, as an expat in the Philippines. 

Everyone Knows That Foreigners Cannot Buy Land In The Philippines


Almost as soon as the thought of buying land in the Philippines enters your head the fact that you are barred from doing so follows either from a quick Internet search or from asking a friend, relative or acquaintance who is informed on the subject. You would be hard pressed to find a foreigner in the Philippines who is not aware of this fact. This post is my attempt to wade through the laws that establish this truth that just about everyone knows. 

The Law


Article 1491 item (6) of the Civil Code of the Philippines is the catchall exclusion barring foreigners from buying land in the Philippines:
Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:

    (6) Any others specially disqualified by law. (1459a)

Who Is Disqualified by Law?


Article 1491 directs us to other legal sources for the definitive answer on who is "disqualified by law" from purchasing land in the Philippines.

For that answer we look to Article XII of The 1987 Constitution of the Republic of the Philippines and WHO IS QUALIFIED.

The 1987 Constitution establishes who is qualified to enter into certain land agreements with the State:
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. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.
 Define the term "alienated/alienable":
Alienable

An interest in property is alienable if it may be conveyed by one individual to another individual. In general, and by common law, private property is alienable. The classical restraint on alienation was the fee tail, which required its owner to pass the property (usually land) to his heirs. A more familiar restraint is that on human organs. 
Simply put, alienate means to sell. Thus, the government of the Philippines may enter into into agreements to sell or lease agricultural land, as agricultural land is the only exception to the non-alienation clause, and it may lease any other classification of land.

And who may enter into such land agreements with the Philippine Government:
  • Filipino citizens and
  • corporations and associations that are at least 60% owned by Filipino citizens
Foreigners are excluded from who may enter into such land agreements with the Philippine Government unless they are part of a corporation or association that is at least 60% owned by Filipino citizens.

Section 3 puts a finer point upon precisely who may purchase and or lease public land:
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.
Whereas Section two was ambiguous about who could lease and who could buy land from the government, the statement from Section 3:
Private corporations or associations may not hold such alienable lands of the public domain except by lease.
establishes the fact that corporations or associations may lease, but not buy public lands.

And this statement, also from Section 3:

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.
establishes the fact that Filipino citizens may lease or buy public land within stated limitations.

The 12 hectare purchase limit in the paragraph above does not contradict the Comprehensive Agrarian Reform Program (CARP) that came later. The 1988 CARP Law caps landholdings at 5 hectares, but the cap is specific to land classified as agricultural.

And the final answer to who may buy land in the Philippines is summed up in Section 7 of Article XII:
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.
Only those who are qualified to hold i.e. lease or buy public lands are also qualified to buy private lands and Sections 2 and 3 established that to be:
  • Filipino citizens and (may lease or buy)
  • corporations and associations that are at least 60% owned by Filipino citizens (can only lease public land but may buy private land)
Therefore, in light of Section 7, only Filipino citizens and corporations and associations that are at least 60% owned by Filipino citizens may buy private lands in the Philippines. If that is not you, then you cannot buy land in the Philippines.

Next Steps


Remember the statement from Section 7: "Save in cases of hereditary succession." It is a very important exception, as "can a foreigner own land" is a very different question from "can a foreigner buy land" and it is addressed in another post titled Foreigners Can Own Land In Philippines Through Hereditary Succession.

Also check out the article Can An Expat Lease Land From His/Her Filipino Spouse?


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