MEMORANDUM

TO: Attorney San Diego

From: Patrick Ramos
Date: October 4, 2015
Re: Foreign Ownership in the Philippines
------------------------------------------------------------------------------------------------------------------------------Issue:
Can foreign individuals acquire land in the Philippines?
Brief Answer:
No. Foreign individuals , as a general rule cannot acquire land in the Philippines as it is
prohibited by the 1987 Constitution. However, there are exceptions with regard to private lands to the
aforementioned rule which can be seen in the Constitution itself and in jurisprudence.
Discussion:
Before discussing why foreigners cannot acquire land in the Philippines, it is important to note
the types of lands that will be discussed. There are two general classifications of lands in the Philippines,
the lands of public domain and private lands. Each of these lands will be discussed to answer the issue
presented above.
Firstly, According to the 1987 Constitution of the Philippines, the only type of land of the public
domain that can be alienated are agricultural land. Section 2 of Article XII of the 1987 Constitution
states:
"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."

It is clear from the provision that agricultural lands is an exception to the ownership of the State
of natural resources which includes lands of public domain. Being alienable means that ownership of the
land (in this case, agricultural land) is capable of being transferred. However not all agricultural land of
the public domain can be alienated because before it is deemed alienable, a positive act of the state
declaring said land to be alienable is required. After a positive act of the State is done, an individual can

acquire the lands by filing an application for its title in court or in an administrative proceeding. Another
way of gaining ownership over the agricultural land of the public domain is by proving that one has been
in private possession of said land since time immemorial. In this instance, the land is considered never to
have been part of the public domain. This doctrine is explicitly stated in Section mentioned above.
It is clear that only agricultural land can be owned by individuals as expressly stated in the last
sentence of Section 2 Article XII of the 1987 Constitution. Therefore, the only lands that can be acquired
by individuals would be agricultural. The section previously cited above speaks of both the lands of
public domain such as the forest or timber, mineral lands and national parks and also of agricultural land
of the public domain. Although these are lands of public domain, the distinction lies in what land can be
alienated. As previously mentioned in Section 3, it is only the latter that can be alienated by the State.
Lands of the public domain such as forest or timber, mineral lands and national parks are not capable of
being alienated as expressly stated in Section 2. With reference to these types of lands, it is only the State
that can own them. The ownership of the State over these lands is embodied in the doctrine known as the
Regalian Doctrine. Section 3 of the same Article provides:
"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."

This provision makes mention of the phrase " Citizens of the Philippines" which leads to the conclusion
that foreign individuals are prohibited to own lands of public domain without any exceptions.
The next classification of land in the Philippines is the private lands. Section 7 of Article XII of
the 1987 Constitution provides:
"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."

This portion of the Constitution explicitly prohibits ownership of private lands by foreigners.
According to the cited provision, the only ones able to acquire private land in the Philippines are the
following: Filipino citizens qualified to acquire or hold lands of the public domain. These are the only
ones allowed by the Constitution to acquire land in the Republic. The Supreme Court has reiterated this
general rule in the case of Borromeo vs Descallar (G.R. No. 159310). In this case, the Court stated:

"Respondent argued that aliens are prohibited from acquiring private landthe capacity to acquire private land is dependent on
the capacity "to acquire or hold lands of the public domain." Private land may be transferred only to individuals or entities
"qualified to acquire or hold lands of the public domain." Only Filipino citizensare qualified to acquire or hold lands of the
public domain. Thus, as the rule now stands, the fundamental law explicitly prohibits non-Filipinos from acquiring or holding
title to private lands"

However, the rule on the ownership of lands by foreign individuals is not absolute as one can see
in law and jurisprudence. The law and jurisprudence will show that there are four exceptions to the rule
that foreigners cannot acquire land in the Philippines. These exceptions are as follows: (1) transfer to an
alien by way of legal succession; or (2) if the acquisition was made by a former natural-born citizen; or
(3) the alien acquired the land prior to the 1935 Constitution; or (4) the prior invalid transfer of land is
cured
The first exception is embodied in the same provision already cited, specifically Section 7 of
Article XIII of the 1987 Constitution. It states in this section that in case the foreigners is a legal heir in a
succession case, then he can validly acquire land in the Philippines. This exception is only limited to
hereditary succession as stated in Section 7 of Article XII. Hereditary succession is also called intestate
succession which is the method used to distribute property owned by a person who dies without a valid
will. Hereditary succession is the only way that a foreign individual may acquire land in the country in
succession cases. Meanwhile, the second exception can be found in the subsequent section of the same
article mentioned. Section 8 in Article XII of the 1987 Constitution provides:
Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine
citizenship may be a transferee of private lands, subject to limitations provided by law.

This article speaks of a case where one was a natural-born citizen of the Republic but subsequently lost
his citizenship. The article is specific in including the characteristic that the person must be a natural-born
citizen of the Philippines. Being natural-born means that he/she does not need to do any act in order to
acquire citizenship in the Republic. Applying the same to the provision of the Constitution, it is clear that
the lawmakers intent is to enable natural-born citizens who subsequently lost their citizenship to acquire
land but not individuals who originally had a foreign citizenship and then was subsequently naturalized
but lost the said Filipino citizenship. Emphasis is placed on the one way a foreigner can be a citizen of
the Philippines which is through naturalization. To make it clearer, a distinction between a natural-born
Filipino and a naturalized Filipino is needed. The definition of a natural-born Filipino is found in Section
2 of Article IV of the 1987 Constitution. The section provides:

"Section 2. Natural-born citizens are those who are citizens of the Philippines from birth without having to perform any act to
acquire or perfect their Philippine citizenship. Those who elect Philippine citizenship in accordance with paragraph (3), Section 1
hereof shall be deemed natural-born citizens."

On the other hand, Commonwealth Act 473 is an authority in cases of a naturalized Filipino. The
act mentions that a naturalized Filipino is one who was granted a citizenship by administrative
proceedings. The granting of citizenship is subject to certain qualifications which it enumerates in Section
2. Section 2 provides:
"Subject to section four of this Act, any person having the following qualifications may become a citizen of the Philippines by
naturalization:
First. He must be not less than twenty-one years of age on the day of the hearing of the petition;
Second. He must have resided in the Philippines for a continuous period of not less than ten years;
Third. He must be of good moral character and believes in the principles underlying the Philippine Constitution, and
must have conducted himself in a proper and irreproachable manner during the entire period of his residence in the
Philippines in his relation with the constituted government as well as with the community in which he is living.
Fourth. He must own real estate in the Philippines worth not less than five thousand pesos, Philippine currency, or must
have some known lucrative trade, profession, or lawful occupation;
Fifth. He must be able to speak and write English or Spanish and any one of the principal Philippine languages; and
Sixth. He must have enrolled his minor children of school age, in any of the public schools or private schools
recognized by the Office of Private Education 1 of the Philippines, where the Philippine history, government and civics
are taught or prescribed as part of the school curriculum, during the entire period of the residence in the Philippines
required of him prior to the hearing of his petition for naturalization as Philippine citizen".

It is clear from the Section 8 of the 1987 Constitution that Philippine natural-born individuals
who subsequently lost his citizenship may be a transferee of a private land but with limitations imposed
by law. The law that imposes these limitations would be Republic Act 8179. The limitations imposed by
R.A. 8179 are the following: (1) If the land is for a residential purpose, it may not exceed 1,000 square
meters of urban land or one (1) hectare of rural land. (2) Also, they cannot own both an urban and rural
land. The individual must decide which one to acquire.(3) Next, previous ownership (meaning a
ownership when he was still a Filipino citizen) of residential or rural land will lower the 1000, square
meter and 1 hectare limit mentioned above.(4) Also, a former natural-born Filipino can only own a
maximum of two (2) lots and these lots must be in different cities or municipalities.
The third exception is available because prior to the 1935 Constitution, there is no law prohibiting
Foreign ownership in the Philippines. Finally, the last exception speaks of a situation where there was
transfer of land to a foreigner which made the transfer invalid, but it was subsequently cured of the defect.

The two ways by which the invalid transfer is cured are when the alien subsequently becomes a Filipino
citizen or he transfers the same to a Filipino citizen. This exception is reiterated by the Supreme Court in
the same case of Borromeo vsDescallar. The Supreme Court stated:
"Therefore, in the instant case, the transfer of land from Agro-Macro Development Corporation to Jambrich, who is an Austrian,
would have been declared invalid if challenged, had not Jambrich conveyed the properties to petitioner who is a Filipino citizen.
In United Church Board for World Ministries v. Sebastian, the Court reiterated the consistent ruling in a number of cases that if
land is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw in the
original transaction is considered cured and the title of the transferee is rendered valid"

Conclusion
The 1987 Constitution of the Philippines clearly shows the prohibition imposed on foreigners in
terms of acquiring lands of public domain as well as private lands in the country, which will serve as the
general rule. The Constitution adds the distinction that only agricultural land in terms of lands of public
domain can be alienated. Under this rule, only Filipino citizens (natural-born or naturalized as provided
for in Section 3 of Article XII of the 1987 Constitution) can acquire agricultural lands of the public
domain therefore foreign individuals cannot acquire lands of the public domain.
As for private lands, the general rule is that foreign individuals cannot acquire private lands but
with certain exceptions. One exception is when a natural-born citizen who subsequently lost his
citizenship becomes a transferee to the private lands but he is subject to the limitations discussed
previously). Again, this exception refers to a natural-born citizen who lost his citizenship and not to a
naturalized foreigner who lost his citizenship thereafter. The other exceptions are seen in jurisprudence
and in some provisions in the Constitution itself. These exceptions are the acquisition of private lands
through hereditary succession, acquisition of the land prior to the 1935 Constitution and finally a prior
invalid transfer of land is cured. Accordingly, a foreigner must know that he cannot acquire lands of the
public domain but with the exceptions stated above, he can validly acquire private lands in the
Philippines.