10.16.2019

Foreigners Can Own Land In Philippines Through Hereditary Succession

Foreigners Can Own Land In Philippines Through Hereditary Succession




Disclaimer


As always, nothing you read here is to be taken as legal advice or professional guidance. This article is an opinion regarding the issue of hereditary succession as it pertains to a foreigner in the Philippines. No guarantee can be made about the accuracy or factual nature of any information found in this article.

Summary Of Facts


Back in the post titled Can A Foreigner Buy Land In The Philippines I implied that, whereas a foreigner is not allowed to buy land, owning land by some other means is a possibility.

To save you the trouble of having to read the entire post the following points summarize what I believe to be the facts of this subject:
  • A person who is not a Filipino citizen can obtain ownership of land in the Philippines under the hereditary succession exception given under the Philippine Constitution.
  • A person who is not a Filipino citizen cannot obtain ownership of land in the Philippines under testamentary succession by having land bequeathed to them in a will.
  • A foreigner whose spouse is a Filipino citizen does qualify under the hereditary succession exception as a compulsory heir. This also applies to children of the Filipino citizen who have yet to be recognized as Filipino citizens.
  • Succession is subject to potentially complex heirship issues. A foreigner may be able to obtain ownership of the real property that their Filipino spouse leaves behind, but they may have to share it with potentially many people.
  • A qualified attorney will be needed to sort of the specifics of this issue.
  • A foreigner is allowed to own the physical building, but must prove ownership.
  • A foreigner's case may also become complicated if the nature if their visa status changes due to the death of their sponsor (spouse) in the case of the 13a Visa and other visa types (see post on Death of Visa Sponsor).

Hereditary Succession


It is possible for a foreigner to inherit land in the Philippines by way of hereditary succession and this fact is stated in Section 7 of Article 12 of the 1987 Constitution of the Philippines:
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.
The above paragraph negates the prohibition on individuals (foreigners) who are otherwise barred from owning land in the specific case of hereditary succession under which the spouse is considered to be a "compulsory heir".

Testamentary Succession


Testamentary succession means that the decedent left a will. There is no legal exception for non-Filipinos to receive real property by testamentary succession, which means that real property cannot be conveyed to a foreigner by it being bequeathed in any form of will.

As we saw above, the Constitution of the Philippines does make a specific exception for hereditary succession by compulsory heirs. 

Compulsory Heirs


The legal definition of the term compulsory heir is found in Section 5 of Republic Act 386 The Civil Code Of The Philippines that deals with the specific case where decedent has left a will:
ARTICLE 886. Legitime is that part of the testator’s property which he cannot dispose of because the law has reserved it for certain heirs who are, therefore, called compulsory heirs. (806)
ARTICLE 887. The following are compulsory heirs:
(1) Legitimate children and descendants, with respect to their legitimate parents and ascendants;
(2) In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and descendants;
(3) The widow or widower;
(4) Acknowledged natural children, and natural children by legal fiction;
(5) Other illegitimate children referred to in article 287.
Compulsory heirs mentioned in Nos. 3, 4 and 5 are not excluded by those in Nos. 1 and 2; neither do they exclude one another.
Therefore, the foreign spouse of a Filipino citizen is qualified to be an heir of real property along with any other compulsory heirs that may exist. 

Intestate Succession


The preceding section refers to the articles of the Civil Code dealing with Testamentary Succession.

When a person leaves no will the hereditary estate is said to be intestate. There is no free portion under intestate succession and the entire estate is therefore subject to the laws of hereditary succession:
Art. 961. In default of testamentary heirs, the law vests the inheritance, in accordance with the rules hereinafter set forth, in the legitimate and illegitimate relatives of the deceased, in the surviving spouse, and in the State. 
Section 4 of the Civil Code provides cases of succession as it relates to a surviving spouse.

Apportionment To Surviving Heirs


The matter of who gets what is very complex to say the least. Fortunately, I found a site that has performed the service of listing a table showing a reasonably exhaustive breakdown here.

The following paragraph is quoted in many locations on the Internet, usually in legal cases, and it deals with the classification of the several types of compulsory heirs:
The compulsory heirs may be classified into (1) primary, (2) secondary, and (3) concurring. The primary compulsory heirs are those who have precedence over and exclude other compulsory heirs; legitimate children and descendants are primary compulsory heirs. The secondary compulsory heirs are those who succeed only in the absence of the primary heirs; the legitimate parents and ascendants are secondary compulsory heirs. The concurring compulsory heirs are those who succeed together with the primary or the secondary compulsory heirs; the illegitimate children, and the surviving spouse are concurring compulsory heirs.
This quote is referenced as "III TOLENTINO, 1992 Edition, p.252." and I believe that it refers to Commentaries & Jurisprudence on the Civil Code of the Philippines Vol. 1. (Person & Family Code). Tolentino, Arturo M. 3. 346.013 T574c. 1992.

The key part of this paragraph is the following:
"The primary compulsory heirs are those who have precedence over and exclude other compulsory heirs.
My layman's understanding of this statement is as follows: As the primary compulsory heirs, legitimate children will always get their share, as a class, which will always be no less than one-half of the hereditary estate. In fulfilling this requirement the share of other compulsory heirs, per their classes, shall be adjusted as necessary.

How A Foreigner May And May Not Protect Their Investment 


A foreigner cannot buy the land that their house sits upon.

A foreigner also cannot lease the property from their spouse in some scheme to protect their investment.

A foreigner may be able to prevent the inclusion of the physical house itself within the hereditary estate by providing proof that they funded the labor and materials for the building. Proof of funding source might be established through bank records, receipts fore labor and materials and an affidavit from the Filipino spouse stating that the foreign spouse funded the construction of the house and being annotated as the person who pays the real property tax.

Having the physical building in your name leaves only the land up for disposition and you may be able to settle for cash with any heirs that may exist (if need be).

Success or failure may depend upon not how tight one's legal case is, but upon who is or is not on the opposing side and what they have to gain by standing in the way.

To avoid all hassle and worry you could opt for the most secure way to protect your investment: leave your money in the US and rent quarters in the Philippines.

As for me? I have taken no steps to protect any investment I have made in our house and property. Our daughter is a Filipino citizen and ultimately the house is hers, but I have envisioned multiple scenarios where I would give our house away. One would be if we return to the US. It would remain in my wife's name but I would have no problem giving it up under the right circumstance. The immediate family of my wife are wonderful people and I love them. I have no problem with them having our place someday if we do are gone. Maybe some of them end up living in it one day with our daughter. Or maybe we just abandon it forever and spend the rest of our days living out of an Airstream at some address unknown.









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