Foreigners on Foreign Soil: Land Ownership and Foreigners in the Philippines

Atty. Rami Hourani

The Philippines is a terribly beautiful country, it is no small wonder that many foreigners want to carve out a small section of it for themselves to spend their sunset years here. Others may want to own property for the purpose of starting a business. The Philippine constitution outright prohibits foreigners from owning land.This article will give you a working understanding of the prohibition and the pitfalls.

The Prohibition

The rule in the Philippines is that Foreigners cannot own land. A corporation which has more than 40 percent of its equity owned by a foreigner is not considered Filipino for the purpose of owning land.

Photo by Joshua Hoehne on Unsplash

Putting it in the name of your Wife

Inevitably, people who come here often find love. They marry and many foreigners live happy lives with the tiny pockmarks and spats that exist in all marriages. However, a small subset of marriages of this kind are very difficult affairs. Clients have described to me horrifying situations where they put their property in the name of their wife only to have her disappear with the children the following day. I find myself in the unfortunate situation of having to inform them that I see no legal remedy that they can avail of. The structure of Philippine laws is such that there is no remedy for the foreigner who places property in the name of his spouse to avoid the prohibition found in the law.

Photo by Everton Vila on Unsplash

Onerous Contracts

Another scheme that is often proposed is to constitute some kind of contract over the property that functionally makes it the property of the person who occupies it. There are Supreme Court decisions which allow you to throw out these kinds of contracts. Relying on these kinds of contracts is essentially relying on the ignorance of the law of the nominal owner.

Photo by Cytonn Photography on Unsplash

Possible Solutions

Most solutions involve a degree of corporate layering and contracts. There are solutions whereby a foreigner owns the building and a 60-40 corporation owns the land which it then leases or gives usufructuary rights to the foreigner. If you have kids, you can be appointed guardian of your kids and have the property put in their names. This latter method partakes of the nature of estate planning as well. The kinds of solutions available will largely depend on an individual assessment of your needs, permissible overhead, and your specific legal exposure.

Atty. Hourani practices law in Cebu City, PhilippinesIf you would like to set an appointment with him, you may reach him here.

Leave a Reply

Your email address will not be published. Required fields are marked *