MEMORANDUM

TO: Attorney San Diego

From: Patrick Ramos
Date: September 21, 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 and that the writer will focus mainly on foreign
individuals and not corporations/associations. 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 XII 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. The section previously cited
above makes the distinction between the lands of public domain and agricultural land. The difference
between these types of lands is the issue of ownership over them. The former can only be owned by the
State as mentioned expressly in the first sentence of the provision ( Regalian Doctrine) while the latter
being a further classification of the former can be owned by Citizens of the Philippines (with the
limitation of not more than five hundred hectares) provided that the state expressly states that said land is
alienable. 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.
Section 3 prohibits foreign invidivuals from owning lands of public domain (even if it is made alienable)
while Section 7 prohibits foreign individuals from owning 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 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 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 one wherein a person
dies without leaving a last will and testament. If there is a will and testament, then transfer of ownership
of the lands is not allowed to foreign individuals. 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. 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. The article only makes mention of natural-born
citizens and makes no further distinction. In the task of construing the law, the law must be construed
strictly basing its construction on the language of the law itself. One specific rule of construction is that of
exclusion which states that what the law enumerates or makes mention is a way of excluding those that it
did not include. Applying the same to the provision of the Constitution, it is clear that the lawmakers
intent is to enable natural-born citizens to acquire land but not individuals who originally had a foreign
citizenship nor to a naturalized Filipino who subsequently lost his citizenship. Emphasis must be placed
that one way a foreigner will be a citizen in the Philippines is through naturalization thus making him a
naturalized Filipino. 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".

The distinction between a natural-born citizen and a naturalized one is vital especially considering the
topic of which individual can acquire land in the Philippines.
It is clear from the foregoing provision that Philippine natural-born 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.