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Ownership in the Philippines

General Rule of Holding or owning a Real Estate

1. General Rule – only Filipino citizens and corporations at least sixty percent of the capital of which is owned by Filipino are entitled to acquire and own land in the Philippines. 

2. Exceptions to General Rule – Alien acquisition of real estate in the Philippines is allowed in the following cases: 

a) Acquisition before the 1935 Constitution;

b) Acquisition thru hereditary succession if the alien acquires is a legal heir.

c) Purchase of not more than forty percent interest in a condominium project.

d) Purchase by former natural-born Filipino citizens subject to the limitations prescribed by law (Batas Pambansa 185 and R.A. 8179). 

3. A Filipino who marries an alien retains her Philippine citizenship (unless by her act or omission she is deemed to have renounced Philippine citizenship), and may therefore acquire real estate in the Philippines.

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ACQUISITION BY FORMER NATURAL-BORN FILIPINO CITIZENS

1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as tax sale, foreclosure sale, or execution sale).

2. Maximum area that may be acquired is as follows :

a) For residential purpose – 1,000 square meters of urban land or one hectare of rural land.

b) For business purpose – 5,000 square meters of urban land or three hectares of rural land.

“Business purpose” refers to the use of the land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry and services, including the lease of land, but excluding the buying and selling thereof.

3. In case of married couple where both spouses are former natural-born Filipino citizens, one or both of them may avail of the privilege, provided that the total acquisition shall not exceed the maximum area allowed.

4. A transferee who already owns urban or rural land for residential purpose acquired while still a Filipino citizen, may acquire additional urban or rural land for residential purpose which, when added to that already owned by him, shall not exceed the maximum area allowed by law.

The same privilege applies to a transferee who already owns urban or rural land for business purpose.

5. A transferee who already acquired urban land for residential purpose shall be disqualified to acquire rural for residential purpose, and vice-versa. The same rule applies to a transferee of land for business purpose.

However, a transferee of residential land under B.P. 185 may still avail of the privilege to acquire land for business purpose under R.A. 8179.

6. For registration of a conveyance in favor of the transferee, he must submit to the

Register of Deeds a sworn statement on the following: date and place of birth;

name of parents, brothers, sisters, and spouse; location, area and mode of acquisition of present landholding; date when he lost his Philippine citizenship; and his present citizenship.

For transferees of land for residential purpose, the sworn statement shall include his intention to reside permanently in the Philippines.

For transferees of land for business purpose , the sworn statement shall include a declaration to use the land for business purpose. Furthermore, the transferee shall submit a certification of business name registration with the Bureau of Trade

Regulation and Consumer Protection. And in case the land is agriculture, he shall likewise submit a certification from the Department of Agrarian Reform that the land is a retained area of the transferor and an affidavit of the transferee that the total landholding inclusive of the land to be acquired does not exceed five hectares.

STEWARDSHIP CONCEPT OF OWNERSHIP

Ownership carries with it a social obligation. As stewards of their land, owners are obliged to use their property to promote not only their interest but also the general welfare. When a person’s landholding exceeds the requirement of his needs, or his utilization is not conducive to general welfare, the State may exercise its power to regulate and control ownership.

FEE SIMPLE

This refers to the “bundle of rights” or attributes which are inherent or appurtenant to ownership, without any limitation or restriction other than those imposed by law or contract. The bundle of rights includes the right to use, to possess, to the fruits, to dispose, and to vindicate or recover.

LANDS OF THE PUBLIC DOMAIN

1. Under the Constitution, lands of the public domain are classified into agricultural, forest or timber, mineral, and national parks.

2. Alienable lands of the public domain shall be limited to agricultural lands.

3. Filipino citizens may acquire alienable lands of the public domain not more than twelve hectares by purchase , homestead , or patent ; or lease not more than 500 hectares.

Private corporations cannot acquire, but may only lease alienable lands of the public domain for a period not exceeding twenty-five years, renewable for the same term, and not to exceed 1,000 hectares

RIGHTS OF ACCESSION

1. In General – The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, whether naturally or artificially.

2. With Respect to Produce of Property – To the owner belongs the:

a) Natural fruits – the spontaneous product of the soil.

b) Industrial fruits – those produced by land cultivation or labor.

c) Civil fruits – the rental income of buildings and/or lands.

3. With Respect to Immovable Property :

a) The owner of land on which anything has been built, sown or planted in good faith shall have the right :

aa) To appropriate as his own the works, sowing or planting after payment of indemnity provided by law.

bb) To oblige the builder or planter to pay the price of the land. However, the builder or planter cannot be obliged to pay for the if its value is considerably more than that of the building or planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate the building after proper indemnity. The parties shall agree on the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

b) The owner of the land on which anything has been built , planted or sown in bad faith may :

aa) Demand and demolition of the work or removal of the planting or sowing at the expense of the builder or planter, or

bb) Compel the builder or planter to pay the price of the land and the sower, the proper rent.

The landowner is also entitled to damages from the builder, planter or sower.

c) If there was bad faith on the part of the landowner and the builder/planter/sower, the rights of the parties shall be the same as if both had acted in good faith.

d) To the owners of land adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the water.

e) The owners of estates adjoining ponds or lagoons do not acquire the land left dry by the natural decrease of the waters, or lose that inundated by them in extraordinary floods.

f) River beds which are abandoned through the natural change in the course of the waters belong to the owners whose lands are occupied by the new bed in proportion to the are lost. However, the owner’s of the land adjoining the old bed shall have the right to acquire the same by paying the value of the area occupied by the new bed.

g) Whenever a river, changing its course by natural causes, opens a new bed through a private estate, the bed shall become a public dominion.

HIDDEN TREASURE

1. Hidden treasure belongs to the owner of the land, building, other property on which it is found.

2. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half of the treasure, shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure.

3. If the things found be of interest to science or arts, the State may acquire them at their just price, which shall be divided in conformity with the rule above stated.

4. Hidden treasure, for legal purpose is understood to be any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.

MEANING OF “TITLE”

“Title” is not synonymous with Torrens Certificate of Title. Rather, it is a generic word which means proof, evidence, or monument of ownership, such as tax declaration, realty tax receipts, deed of sale, and Torrens Certificate of Title. But, of course, the best title or best evidence of ownership is the Torrens Title because it is indefeasible, imprescriptibly, and binding against the whole world.

MODES OF ACQUIRING TITLE

1. Private Grant - voluntary transfer or conveyance of private property by a private owner, such as sale or donation.

2. Public Grant – acquisition of alienable lands of the public domain by homestead patent, free patent, sales patent, or other government awards.

3. Involuntary Grant – acquisition of private party against the consent of the former owner, such as foreclosure sale, execution sale, or tax sale.

4. Inheritance – acquisition of private property through hereditary succession.

5. Reclamation – filling of submerged land, subject to existing laws and government regulations.

6. Accretion – acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as a result of the river current.

7. Prescription – acquisition of title by actual, open, continuous, and uninterrupted possession in the concept of owner for the period required by law.

LIMITATIONS TO BUNDLE OF RIGHTS

Legal or Governmental Limitations:

a) Zoning – refers to land use classifications and the allowable utilization under each classification.

b) Taxation – the power of the government or any of its political subdivisions to impose charge or burden upon persons, property or property rights for the use and support of the government.

c) Eminent Domain – the power of the State or any of its instrumentalities to take private property for public use and payment of just compensation.

d) Other provisions of law such as legal easement, the requirement of legitime in succession, prohibition against sale and encumbrance of property acquired by patent, rent control, laws on subdivision development, urban and agrarian reform, etc.

2. Contractual or Voluntary Limitations – Those imposed by the grantor of the property to the grantee, either by contract (e.g. donation), or by last will; or those imposed by the owner, himself such as voluntary easement, mortgage, lease, use restrictions in subdivision contracts, etc.