MEMORANDUM

TO: Attorney San Diego

From: Patrick Ramos
Date: September 16, 2015
Re: Foreign Ownership in the Philippines
------------------------------------------------------------------------------------------------------------------------------Issue:
Can foreign individuals acquire land in the Philippines?
Brief Answer:
No. Foreigners, as a general rule cannot acquire land in the Philippines as it is prohibited by the
1987 Constitution. However, there are exceptions around the aforementioned rule which can be seen in
the Constitution itself and in jurisprudence.
Discussion:
Before moving on the discussion as to why foreigners cannot acquire land in the Philippines, it is
important to note the types of lands that will be discussed. According to the 1987 Constitution of the
Philippines, the only type of land that can be alienated are agricultural land. This is found in Section 2 of
Article XIII of the 1987 Constitution which 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 that the rest of the natural resources comprising the Republic are unalienable. Being
alienable means that ownership of the land (in this case, agricultural land) is capable of being transferred.
It is also important to note that the agricultural land can be acquired either with a positive act of the State
declaring a land as alienable or by being in possession of said land since time immemorial. The necessity
of a positive act or by being in possession of a land since time immemorial can be traced to the Regalian
Doctrine. This doctrine is explicitly stated in Section mentioned above.

It is clear that only agricultural land can be owned by individuals or corporations/associations.

Taking a look at the same article in the Constitution, one will see that foreigners cannot outright acquire
land in the Philippines. Section 7 of Article XIII 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 lands by foreigners. According
to the cited provision, the only ones able to acquire land in the Philippines are the following: Filipino
citizens or a corporation/association which a Filipino has 60% ownership in the capital thereof. 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 land. This is embodied in Section 7, Article XII of the 1987
Constitution,26 which is basically a reproduction of Section 5, Article XIII of the 1935 Constitution,27 and Section 14, Article
XIV of the 1973 Constitution.28 The 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 citizens or corporations at least 60% of the capital of which is owned by Filipinos are 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 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
succession cases, then he can validly acquire land in the Philippines. Meanwhile, the second exception
can be found in the subsequent section of the same article mentioned. Section 8 in Article XIII 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 lost his citizenship
due to a circumstance such as changing citizenships. However this article is not applicable to foreign

individuals whose original citizenship is of a different country nor to a foreign individual who was
naturalized but lost his citizenship thereafter. The reason for the inapplicability of this article to the
mentioned individuals is the express exclusion of such by Section 8 of Article XIII of the Constitution. It
is clear from the foregoing provision that these types of individuals may be a transferee of a private land
but which limitations imposed by law. The law that imposes these limitations would be Republic Act
8179.
Some of 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 vs Descallar. 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 land in the country which serves as the general rule. It states that only Filipino
citizens, former natural-born Filipinos, and corporations which is at least 60% owned by a Filipino, can
acquire land in the Philippines. The Constitution adds the distinction that only agricultural land can be
alienated. However, as one can see, the general rule on the foreign ownership is not without exceptions.
As seen in jurisprudence and in some provisions in the Constitution itself, foreigners can validly acquire
land through the ways discussed above. Accordingly, a foreigner must know that with these exceptions, he

can validly acquire land in the Philippines despite the general rule stated in the Constitution which forbids
the same.

Notes for REvision:

For brief answer, answer directly. No and then say that there are a few exceptions.
When you discuss
place legal basis here and not brief answer
So far as lands of public domain are concerned
when it comes to private lands
no with some exceptions then CITE THEN go straight to section 7 & 8
then go to exceptions (then cite)
ANSWER directly and state legal basis.
include discussion on natural-born citizen (BAWAL UN NATURALIZED)
no suggestions.
BATAS PAMBANSA LIMITS in the following (then enumerate)
you can place the citation for the case in the footnote
G.R. NO along with date OR 101 SCRA 101 (then exact page where you found it if possible)
wag mo nang banggitin ang foreign corporations (individuals ka lang eh)